Economic indicators are scheduled publications of economic data, declarations and announcements of leading actors in the financial scenario. There are many indicators, with different place of origin, target audience and effect in the various financial markets. For practical purposes, we have separated the indicators by region (first the American indicators, then the European ones and finally the Asians).
Check our economic calendar to see the next economic events.

Types of economic indicators

The indicators vary in frequency; some are daily, others monthly and others quarterly. Before the indicator is announced, leading financial figures speculate on the outcome and investors base their movements on those speculations. An economic event usually has double influence; first when it is announced and then when compared to the forecasts made above. If there is a lot of difference between speculation and the real figure, there can be big changes in the market.

Some examples of economic indicators may be a country's unemployment rate, interest rates, new building permits or the federal funds rate. Each indicator can affect more sectors and not just its own market. For example, if a government issues a declaration on a greater number of construction permits, these will result in more jobs, lowering the unemployment rate and therefore causing a higher consumption rate that will lead to a strengthening of the local currency .

Example of economic indicator

An example of an indicator with an important impact is the nonfarm payrolls (NFP), published on the first Friday of each month by the United States Institute of Labor Statistics. This report reveals the change in the number of people employed in the US. with respect to the previous month, excluding the agricultural industry. This covers approximately 80% of the US workforce. An increase in the number of new people hired generally indicates that the market is growing. As a result, the US dollar will be stronger. If an operator wants to invest and speculate with it well in advance, and opens purchase positions before the announcement, the results will be in their favor. Naturally, if there is a fall in employment, the dollar will weaken. In any case, NFPs and previous speculations will cause vibrations in different instruments.

How to use economic indicators?

To use the indicators to your advantage, an adequate market analysis is required. Some investors prefer a more elementary analysis, while others perform a more thorough analysis. Indicators can be a very useful tool for all investors and require precise monitoring of the economic calendar. When the investor knows that an event will occur, for example, the supply and demand rate of consumer supplies, he will speculate with the figure to be published and will choose which instrument to operate and whether to open a purchase or sale operation. If the investor succeeds, the operation can result in substantial benefits.

Speculation with economic indicators should be made with knowledge of markets and financial events or general events that may affect the indicator. With this information, speculation will take place after rational reflection. Any investor, beginner or experienced, should become familiar with the economic calendar and know which indicators are relevant in their operations and in what way. Thus, the operations will be more successful and the profits will exceed your expectations.