Information Resources
Here is a list of the type of announcements that someone involved in Forex trading needs to look for regardless of which of the countries the information is coming from. The first is Employment data. Employment data consists of the number of individuals who are employed within the country or economy. For those who are looking for this information in the US. It is known as non-farm payrolls and is released on the first Friday of the month. It is released by the Labor Statistics Bureau. Strong increases in employment usually indicate a prosperous economy, decreases of course signal the opposite. Strong employment data can send a currency higher after economic troubles or can lead to inflation, which could decrease the value of the currency. This is why not just the data but the conditions surrounding it must be researched.
Interest rates are a major consideration and focus for the Forex market because it has such an effect on the currency that is the Forex driving force. For information on the interest rate look at the central bank for the country for rate changes, smaller institutions will follow this one. If you are looking in the US, you will need to direct your attention to the FOMC or the Federal Open Market Committee. This is the committee, which determines the bank rate. In other words, it determines at what rate the banks are allowed to borrow and lend to the US Treasury. They meet 8 times a year to determine the bank rate. Individuals who are successful in Forex trading pay attention to these meetings and the minutes of these meetings.
Inflation, just as in the economic theories it is obvious that with the trading of currency that the inflation rate of a particular country is vital to making a trade a success when working the Forex market. Inflation data will measure the increase as well as the decrease in the price levels of items of a specific period of time. Because of the large quantity of items and services to measure, they are usually measured in baskets or units. Increases in the price of goods and services usually indicate inflation and the chance that the currency of a country will depreciate in value. The Consumer Price index is the US tracking of inflation and is released monthly by the Labor Statistics Bureau.
The Gross Domestic Product is the measurement of all finished goods and services within a country over a specific period of time. There are four areas that the GDP is split into; these are private consumption, government spending, and business spending and total net exports. It is considered the best overall way to judge the health of an economy. Increases in gross domestic product indicate economic growth. The healthier an economy the more stable the currency, as well as an increase in value as out of country investors look to investing in businesses and goods within the country. Within the US, this information is released by the Bureau of Economic Analysis and is released during the later half of the month every month.
Retail sales are also an important factor in how a currency will respond on the Forex market. The measurement does not look at every store but rather groups of stores with varying types of goods and services in order to get an idea of consumer spending. It gives a strong idea of the strength of the economy. The Department of Commerce releases this data with the US and it comes out usually in the middle of the month.
Durable Goods are manufactured goods that are ordered, shipped and unfilled for a particular time period. Durable goods are things like cars and appliances and they give an idea of the amount of long term spending which helps in long term predictions when it comes to currency fluctuations.
These are just some of the factors that a Forex trader is required to take into consideration if they want to be successful in the Forex market. Having a strong knowledge of economics is vital. This does not have to be gained through the education system. There are a number of ways that an individual can education him or herself through the use of the internet and other available resources in order to gain the knowledge necessary to successfully track and predict the movements of an economy and thereby the movements of the currency for that particular country.