There are certain economic indicators, or reports, that forex traders pay keen attention to in order to determine the strength of the economy. These reports are released by governments and independent bodies who collect and analyse the data prior to publishing it. These reports are released at set times and can be released weekly, monthly, quarterly or annually, depending on the report.
Traders will generally look at the latest result of each report, as well as any changes to the results from the last published report.
The reports create an analysis of current economic performance and predictions of future performance.
Forex traders monitor the following reports:
Real GDP (Gross Domestic Product)
The Federal Reserve uses data such as the real GDP and other related economic indicators to adjust its monetary policy.
M2 (Money Supply)
The Federal Reserve uses this data to assess current economic and financial conditions, and to help alter its monetary policy, which includes raising and lowering interest rates.
S&P 500 Stock Index (the S&P 500)
The index is designed to measure changes in the stock prices of component companies. It is used as a measure of the nation’s stock of capital, as well as a gauge of future business and consumer confidence levels.
The non-farm payroll announcement is a measure of total workers in the US. It excludes certain working groups such as farmers but covers approximately 80% of the working population.