Which economic indicators do professional investors mainly follow?

Key indicators that professional traders follow

A trader’s economic calendar quickly fills up when trying to focus on all the economic events that occur. Many reports, announcements and data released weekly by government agencies and NGOs show the performance of different economies and specific products in different countries.

Fortunately, you don’t have to pay attention to all of them. You may consider focusing on announcements that are relevant to what you are trading. For example, if you are trading Canadian dollars (CAD), you will want to know all the indicators published in Canada. However, as the Canadian dollar relies on energy exports and is considered a commodity dollar, we should also pay attention to reports on oil and gas prices.

That said, there are some indicators that can change all international markets and you need to be careful, no matter what you are trading. Here are some notable economic indicators on the calendar each month.

Number of non-farm payrolls (NFP)

Employment data is an important signal of the state of the country’s economy. The US Bureau of Labor Statistics publishes employment statistics for the previous month on the first Friday of every month. This includes unemployment reporting and NFP, which is good for the health of the economy, as the more employees you have, the more money you have to spend and distribute. Traders are paying close attention to this indicator as higher or lower expectations can mean major market movements.

Buyer Index (PMI)

Published by the Supply Management Association (ISM), this report surveys 400 purchasers on new orders, inventory levels, production, supplier transport, and the employment environment. Although this is a relatively small specimen focused primarily on the manufacturing industry, it has historically been shown to be an excellent indicator of GDP.

Producer Price Index (PPI)

Like the CPI, the producer price index is also a key inflation indicator of the rate of change in products. An increase in PPI means an increase in the cost of a company that informs consumers of price increases. Both CPI and PPI are often considered except for food and energy, which are subject to volatile prices.

Oil price

Announcements from agencies such as the American Energy Information Association (EIA) will receive a lot of attention. Oil and energy are generally the keys to economic activity, and price levels provide important insights into the health of the economy. Soaring oil prices lead to soaring prices for other products that require energy for production. Petroleum is not only the key to the distribution of products, but also an important raw material for many products.

Consumer Confidence Index (CCI) and retail sales

Consumer spending is directly linked to the bottom line of the company. The National Industrial Council has published a report of 5,000 US households surveying their perceptions of economic conditions and consumer spending. The more confident you are in the future economic situation, the more likely you are to consume more. The CCI shows the outlook, but another credibility indicator, retail sales, focuses on historical shopping levels. It measures consumer demand for products and is an important macroeconomic indicator for economic contraction or expansion.

Consumer Price Index (CPI)

CPI is an indicator of changes in consumer prices and indicates inflation. Basically, it shows the change in living expenses for consumers. The central bank carefully observes the CPI, a key inflation indicator, and applies changes to fiscal policy based on what is reported. Central banks aim to drive economic growth and bring stability to their currencies, which is measured by inflation. By focusing on the CPI, investors can be alert to future trends in central bank monetary policy.

Durable Goods Report (DGR)

This report investigates the manufacture of products with a lifespan of three years or more and is a reliable indicator of the health of heavy industry. A high reading indicates that corporate sentiment is improving due to improved consumer sentiment.

Number of new housing starts / building permit / number of new housing sales

These indicators give us insight into the growth of the economy as a whole. Building and buying homes has become a huge purchase for most consumers, and these reports are important indicators of the solidity of current and future economic growth.

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Utilize Economic Calendar of XM

If you are trading in the fx market, you need to be aware of the world events that affect the exchange rates of the currency pairs you are trading. The easiest way to do this is to use a financial calendar to keep track of such market movements. Employment data such as changes in GDP, interest rate determination, consumer price index (CPI), purchaser index (PMI) and number of US non-farm payrolls (NFP) in the countries of the currencies currently trading are the most influential. Is part of what is.

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Choose the financial calendar that suits you

You can look up the major political and economic indicators of the future online or create your own calendar, but some reliable online platforms that offer economic calendars will automatically check the indicators on a regular basis. Will be updated. XM has a good financial calendar, emphasizing the importance of each indicator that is likely to move the market. If you are trading in a particular market, you may choose to add these indicators to your personal calendar.
The key to successfully using these events as your advantage is not only to know when they will occur, but also to predict where and why the market will move as a result. However, despite these events presenting traders with great opportunities to successfully trade, in most cases market reactions are unpredictable. It is up to the trader to refer to these events when trading, but it is still important to know when these events will occur. The first step, of course, is to choose a financial calendar that is easy for you to use.

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Step 1: Choose a financial calendar

You can look up the major political and economic indicators of the future online and create your own calendar, but there are some reliable online platforms that offer economic calendars, where the indicators are updated automatically on a regular basis. Will be. XM offers a great financial calendar, emphasizing the importance of each economic indicator that has the potential to move the market more. If you are trading in a particular market, you will choose to add these indicators to your calendar.

Experienced Forex traders predict currency movements to get the most out of economic announcements and observe future economic events to take immediate action. They usually already calculate the impact on currency pairs and plan what transactions to make according to the calculation results. They also tend to focus on certain indicators that they believe are most influential and important to the currency pairs they trade.

Traders can use the economic calendar to keep track of future announcements. Usually, economic experts anticipate the measures that are likely to be announced. Forex traders use these forecasts to price currency pairs in response to currency movements before other traders seize the opportunity and maximize profits. In reality, economic events can quickly change the direction of a currency’s movements, and the quicker you react to a trading decision, the more likely you are to make a profit. Of course, the ultimate profit depends on the ability to accurately predict currency movements and volatility. It may not be the data that actually comes out, it is about whether the data is unexpected. For example, if you predict that NFP will have 130,000 new employees and are far from the numbers, you may see a correspondingly large movement in the US dollar.

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Step 2: Use the calendar

You can choose from many macroeconomic indicators, but the question is which one is best for you. The first thing to consider when looking at an economic calendar is the assets you are trading. Certain indicators directly or indirectly affect currency pairs. A direct relationship is when the ECB is trading EUR / USD and the ECB will make interest rate decisions in the future, and an indirect relationship is a policy that affects the currency or currency pair that is directly related to the transaction. If announced.

Another consideration when choosing an indicator to follow is what kind of transaction to make. If you are a day or buy and hold trader, different indicators, including rising interest rates, will have a temporary and long-term impact on the market. It can affect market sentiment in the short term and prices in the long term. (Because it is directly related to inflation, which is inversely related to the exchange rate of the currency).

Some indicators, such as international GDP and international petroleum reserves, can cause international volatility (especially if less than expected).

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Remember to consider all political and economic factors

The important thing is that regular observations of your calendar will give you a more accurate picture of your trends, and you will be able to profit from trend analysis by distinguishing them before the market.

An important thing to keep in mind when using an economic calendar is that you need to consider all the political and economic factors that can affect a currency pair. This means that you need to get a complete picture, not just a specific announcement or event. For example, an event that affects a currency you are not trading will also affect the pair you are trading. Therefore, be careful when choosing which indicators to display on your calendar.

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