Before using Forex market, traders must make a technical analysis, based on charts and indicators. To find out if a country’s currency is worth, you have to evaluate the economic situation of the country by reading proper reports and documentation. There are some important economic indicators and reports you shouldn’t miss to read if you decide to make transactions.
The Gross Domestic Product (GDP), considered the most significant measure of a country’s economic performance, covers the total market value of all finished goods and services produced in a country in a given year. Analyzing the evolution of this indicator, a trader can notice the economy trend so he can decide if the given currency is worth for a trade.
Consumer Price Index (CPI) measures the variations of price in the economy and the level of inflation. The CPI measures and compares the price changes of the representative goods and services in the economy (a basket of goods). This indicator is very important for its capacity of increasing fixed income and Forex markets.
Retail sales are also a very important report that offers information about the total receipts (or dollar value) of all merchandise sold in retail stores of a country. The consumers are the main part of the economy, so they decide the direction of the economy. Retail sales are also useful because they are a timely indicator, based on previous months sales.
Industrial production is a report containing information about fluctuations in the production of factories, mines and utilities of a country. A trader will be attracted by increasing values of production and capacity utilization.
As a new Forex trader, this is the main information you should know before choosing a currency. There are more influencing factors that change a currency’s value, but, for the beginning, these indicators will help enough.