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What indicators connect the economy and the exchange rate?


The following are examples for the US economy, but other major economies (governments, government agencies or accredited experts) publish similar indicators:


  • Consumer Price Index

  • Employment Report

  • CCI – Consumer Confidence Index

  • Employment Situation Report

  • Federal Open Market Committee rate announcement

  • Gross Domestic Product

  • Institute for Supply Management manufacturing index

  • Purchasing Mangers Index

  • Retail Sales Data

  • Trade Balance

  • Treasury Department monthly budget statement

  • Current Goods

  • Housing Starts

  • Production Utilization

  • Producer Price Index

  • Employment Cost Index



How do they affect Forex trading?


They affect Forex trading because traders read them to see what key information they can get about the economy concerned. However, they also affect trading in that a significant number of deals are done not only just after the reports come out, but also just before.


What is the “Commitment of Traders Report “?


The Commitment of Traders Report indicates the net buying and selling positions of traders in large trading organizations in the futures market. The government insists that these organizations give information on their activities, because they are large enough to have a significant influence on how the market evolves, and therefore on how you could be affected in your own trading activities.


The trend, the whole trend, nothing but the trend


However you use these indicators and more generally however you analyze the market, what is most important is to identify the trend of the currency that interests you, including where the exchange rate has been and where it’s likely to go. The information above can help, but it’s no substitute for doing your own thinking and making your own realistic conclusions.