If you know what are the economic factors affecting the Forex, you can predict currency movements and limit your losses. These economic factors are publicly available and are a measure of economic stability of a state. A good trader uses for its economic investment market indicators. The economic reports often show no improvement or decline in the economy suggested by these indicators.
Economic stability
The main impact indicator forex trading is the economic stability of the state. Economic factors such as unemployment and the state government have a significant impact on currency fluctuations. If economic conditions are good, prices reflect the currency of this condition. back on the other hand, in the case of economic turmoil, inflation and unemployment rates, exchange rates.
GDP
Another important factor to consider when trading currency is the GDP of a country. GDP is the total value of all goods and services produced and sold in a state. It is measured for a period, usually one year instead of one week or a month. Moreover, since GDP is a lagging indicator, it reflects the change if the economy is already following a trend. For this reason, the GDP is used in conjunction with other indicators.
Retail Report
A third economic indicator affecting Forex Trading is reporting retail sales. This report shows total receipts of all retail stores in the state. This measure is generally calculated by taking a sample of retail stores in the state. It also reflects consumer choice in a state and is considered an important indicator of the economic state of a country.
Report of Industrial Production
The industrial production report is another important economic indicator affecting currency trading. Such a report, measures of industrial production of a country relative to the potential production capacity over time. If production is in an optimal, Forex positively affected.
CPI
Another key indicator of the economy affects Forex Trading is the CPI index or consumer prices. It measures changes in prices of consumer goods in 200 different categories over time and is commonly called inflation. The amount of exports and imports by country also reflect the strength or weakness of the economy. The increase in exports shows the strength of the economy and affect forex-positive.
Although useful, these indicators are not the only factors that influence the currency prices. In addition, most of the factors to follow certain trends and it is necessary to understand how they affect the currency hit a bell on the forecasts.
