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Best indicator Forex

The value of the currency on the Forex does not increase or decrease randomly. The amount of money directly depends on the economic potential of the country and the trust it inspires. To assess this potential, specific vital indicators are used. When making transactions in the Forex market, it is necessary to monitor these indicators continually, because any change in them entails a difference in the price of a currency. The currency acts as an authorized representative of the state and allows analyzing the economic potential of this state.

 

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The output of fundamental indicators is becoming the more and more critical engine of the market. If we focus on the impact that economic data has on forex market prices, then five indicators will come to the foreground, which is most closely monitored due to their potential to move currency prices.

Why does economic news have an impact on short-term trading?

The data itself is not as necessary as how much it coincides with market expectations. Besides knowing exactly when the information is coming out, it is vital to understand what economists predict for each indicator. For example, knowing the economic impact of an unexpected monthly increase of 0.3% in the Consumer Price Index (CPI) is not as relevant to your short-term trading decisions as knowing that the market expected a 0.1% fall in CPI this month.

 

Analyzing the long-term effects of unexpected price rises on the Forex can wait. Still, in the meantime, you should take advantage of short-term trading opportunities that are usually available within the first thirty minutes of release. Market expectations for all economic data are published on our website, and you should closely monitor it along with the release date of the indicator.

 

The regular movement after the release of the data:

  1. Non-Farm Payrolls - Unemployment; Middle traffic: 124 points

  2. FOMC Interest Rate Decisions; Medium traffic: 74 points

  3. Trade Balance; Medium traffic: 64 points

  4. CPI - Inflation; Medium traffic: 44 points

  5. Retail sales; Medium traffic: 44 points

Let us explain the meaning of each of these indicators.

Non-Farm Payrolls - Unemployment - Number of new jobs created in non-agricultural sectors of the economy for a month

The unemployment rate is a measure of labour Forex strength. One way analysts measure economic power is by the number of jobs created and the percentage of workers unable to find employment. The large number of jobs created is characteristic of periods of economic growth, as companies must increase their labour force to meet demand.

 

Standard release Schedule: First Friday of the month, at 8:30 a.m. Eastern Time (16:30 a.m. Moscow time).

FOMC Interest Rate Decisions - FOMC Rate Solutions

The Federal Reserve's Open Market Operations Committee (FOMC) sets the rate for federal funds, or overnight interbank lending. The price is set at a meeting of the FOMC, with the participation of members of the Federal Reserve Board of Governors and presidents of regional Federal Reserve banks.

 

Exit Schedule: 8 meetings are scheduled during the year. Specific dates can be found in the economic calendar of events.

Trade Balance

The trade balance measures the difference between the value of goods and services that a country exports and the value of products and services that it imports. A trade surplus appears when the cost of exported goods exceeds the cost of imported goods, while a trade deficit means that imported goods are more expensive than exported goods.

 

Exit Schedule: In the middle of the second month after the reporting period. Check the economic calendar.

 

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CPI - Consumer Price Index

CPI is a key inflation measure because it measures the value of the established consumer basket of goods. Higher prices are considered harmful for the economy, but as central banks often respond to inflation by raising interest rates, currencies sometimes react positively to reports of higher inflation.

 

Release Schedule: Monthly around 13th of each month, 8:30 a.m. EST (16:30 a.m. Moscow time)

 

Retail Sales - Retail Sales

The index is measured for the selected product and expresses the fluctuation of sales volume for retail trade on the forex. The indicator is used to measure the confidence and activity of buyers because an increase in sales volume indicates an increase in economic activity.