Forex Fundamental Analysis: Indicators for the United States Dollar (USD)
This article will give you an overview of the main economic indicators for the United States Dollar (USD), what they mean, when they are released in reports and how they affect the price of the USD. If you follow these indicators in your economic callender, you will be well be ready to trade on them.
You can use these indicators to trade on their release or as information for future trades. As you will see below, there are many monthly reports on which to trade.
Below is a comprehensive list of all major indicators:
Trade Balance:
The trade balance has a high impact on the value of the USD. Trade Balance is the net difference between all exports and imports. If the Trade Balance is positive it means that there are more USD coming into the country than going out. This increases demand for the USD, which raises the price. If the Trade Balance is negative, there are more dollars going out than coming in, which increases supply and lowers price.
The Trade Balance Report is released monthly around the 10′th of each month.
Treasury International Capital (TIC)
The TIC measures the monthly net differene in security transactions across beroders. If the TIC is rising, it implies an increased demand for USD. This has a positive effect on the USD.
The TIC is released monthly around the 15′th.
Gross Domestic Product (GDP)
The Gross Domestic Product is the main indicator for economic activity. The GDP is the value of all good produced and services summed. A rising GDP is an indicator of a healthy economy which in turn will attract investment and rising the price of the USD.
GDP figures are released quarterly.
ISM Manufacturing Index
The ISM Index is an index that measures the general business activity in the manufacturing sector, which is the backbone of the economy. A number of over 50 is characterized as economic growth and under 50 as economic decline.
ISM Index data is released monthly on the first work day of each new month.
Philadelphia Fed Index
This index is a survey conducted by the Philadelphia Federal Reserve District Manufacurers and measures the business conditions of the sector. A positive trend is a sign of an improving economy and will have a positive influence on the USD.
PFI is released around the 15′th of every month.
Durable Goods Orders
Durable goods are goods with an expected life of over 3 years and this key figure can therefore be seen as indication of investment in capital and means of production. This is a favorite indicator of traders to predict future production.
Released around the 25′th of each month.
Consumer Price Index (CPI)
The CPI is one of the major inflation indicators as seen from a consumer viewpoint. It is a very important indicator because it can be used to predict interest rate policy by the Federal Reserve. The Fed has historically increased interest rates when inflation is over 2%. Increasing interest rates attract more investment in USD and thus has a positive effect on the USD price.
Released around the 13′th of each month.
Producer Price Index (PPI)
Another inflation indicator, but this time measured from the producer side.
Released in the middle of each month.
Unemployment Rate
Unemployment rate is a very important indicator for the level of economic activity as employment numbers closes reflect the general economic level. Low unemployment signals a strong economy which will have a positive effect on the USD.
Released in the first week of each month.
Federal Open Market Committee (FMOC) Statement
The FMOC is a committee within the Federal Reserve that sets the interest rates for the FED. The committee votes eight times a year on the short term interest level (Fed Funds Rate). This is a very important indicator that traders constantly try to predict as interest rates are a major factor in currency prices.
Released every six weeks.
Federal Reserve Chairman Speech
One of the highly anticipated news of the economy as the Fed Chairman holds large influence over interest rates and therefore this speech gives an insight into the current agenda of the Feds monetary policy.
These are but some of the many economic indicators used in fundamental analysis. Knowing exactly when they take place is paramount for any trader. It is essential for any serious trader to have a forex calender with the dates and times of these events mapped in. There are many interactive calenders available online, with most being provided by the brokers.
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