Skills for using economic indicators on foreign exchange platforms

Due to the differences in economic conditions in various countries, the focus of analyzing economic data in different countries should also be different, and the focus of different time periods will also affect the role of economic data. Many investors find it difficult to start with fundamental analysis, especially the use of economic indicators. This article still uses US data as an example to illustrate.

Order of importance of economic indicators

Among the many economic indicators, different indicators have different importance for different countries and different periods, and their influence will also change with changes in market focus. Therefore, in actualForex PlatformIn operation, it is crucial to determine the focus economic indicators of the market at the current stage.

In the case of the United States, the main economic indicators that affect the exchange rate of the dollar include:

Gross Domestic Product GDP

Balance of trade

Inflation conditions/interest rate levels

Unemployment rate/non-farm payrolls data

Retail data

Consumer confidence/business sentiment data

Industrial production data/manufacturing data

Unexpected changes in important economic indicators can often cause sharp fluctuations in the short-term market, and even affect the trend of other financial marekts. Due to the differences in the impact of data on the market in different periods, and the need to combine economic development cycles and specific market environment analysis, there is no fixed degree of importance and order. Here is a relatively important order for reference:

Gross Domestic Product

Inflation data

trade data

Unemployment data

sales data

confidence data

production data

Practical application of economic indicators

Economic indicators are usually released at a fixed time, and investors can analyze and respond according to the following procedures in practice:

The first step is to understand the timing of the data release.

The second step is pre-data and market expectations (it used to be difficult to obtain such information, but now relevant information can be quickly obtained through the Internet).

The third step is to understand the current market focus and the country's recent economic situation.

The fourth step is to evaluate the significance of the data.

The fifth step is to make a judgment and an operation plan.

Through these five steps of preparation, investors have a good idea of the upcoming economic data and its possible impact. They have basically completed the analysis of economic indicators and can operate according to the plan. However, due to the rapid changes in the market, we cannot grasp all the information, so it is necessary to pay attention: when the direction suddenly changes, adjust the strategy in time, not stick to the rules.

The following is an example of the GDP indicator of the United States in the fourth quarter of 2001.

Under normal circumstances, the impact of gross domestic product (GDP) on the market is reflected in the following two aspects:

● Strong economic growth keeps the country's currency appreciating, which in turn puts pressure on the currency.

● If strong growth is accompanied by higher inflation, the rise in the currency will be offset.

According to the analysis of the situation at that time:

From the perspective of the time, the US economy began to slow down and decline in early 2001. After the GDP growth in the third quarter was negative, the market generally expected that the fourth quarter would also be negative, indicating that the US economy may enter a recession.

2. After a major emergency, the market believes that the US economy has been hit again on an unsatisfactory basis, and this indicator reflects the actual impact of the event on the economy.

3. In order to save the slumping economy, the Federal Reserve has cut interest rates sharply for the first time in history, and the effect of interest rate adjustment has gradually emerged. Indicators can also reflect the degree to which easing policies have driven the economy.

4. Market analysts are highly concerned about this, and relevant remarks and analysis are flooding the market.

Based on these judgments, it can be basically determined that the data is a market focus indicator, which will have a positive impact on the market, and investors need to treat it with great caution.

It can be analyzed that if the data is negative as expected, the trend of the dollar will face more pressure, and the euro may turn from a short-term hold to a rebound; if there is an accident, the dollar will be supported. We should be prepared for both hands according to the possible situation.

Sure enough, when the data were released, US GDP unexpectedly rose to 0.2% in the fourth quarter of 2001, better than market expectations, and the dollar strengthened immediately after the data was released. This also shows that inForex PlatformThe importance of paying attention to the dynamics of economic indicators.