3 Top Trading Indicators

There’s such a thing as too much information. As a trader, it can be hard to know what indicators or events to watch out for. To help you out, we’re sharing our top 3 trading indicators to watch. Then we’ll run through the key fundamental events of this week.

What to look out for

Here are 3 indicators we always follow for our trading clients. We recommend you keep an eye out for these guys whenever they pop up.

#1 Gross Domestic Product report (GDP)

GDP is a measure of the overall economic health of a country. By the time it’s released, most of the information contained is already pretty well known to the markets, thanks to a number of other releases. So, on the face of it, GDP announcements may not seem that significant.

However, some cheeky GDP releases have been known to spring a few surprises along the way. If the indicator data differs even slightly from the previously established narrative, the markets can move in a monumental way.

The impact of a higher than projected GDP on EUR/USD, 2018

Source: DailyFX

GDP is probably one of the best yardsticks for traders to use in order to gauge the current stage of the economic cycle and the general health of the economy. Some forex traders set their watches by it!

#2 Non-Farm Payroll

Employment data always has a big impact on the markets and it has the power to massively sway monetary policy. And Non-Farm Payrolls are the mother of all US employment data.

Released on the first Friday of each month, NFP is one of the most important reports on the calendar for a lot of forex traders. This indicator is the measure of the current number of workers in the US excluding farm workers and those in a few other job classifications.

Like GDP, if the results are unexpected, crazy things have been known to happen to the markets.

Impact of a worse than expected NFP release on USD

Source: Wikifx

Naturally, the most affected currency pairs are those that contain the USD. However, some others, e.g. CAD/JPY can also be affected. So, it’s a release that all traders need to take into account.

Quite often, any changes in the non-farm payrolls have near-mirrored quarterly GDP changes. So, some traders use the NFP as a proxy for US GDP — and we’ve already told you how important that one is!

#3 Consumer Purchase Index (CPI)

The CPI is a report that measures the current cost of goods and services in a country. As such, it’s another great measure of the health of an economy.

CPI releases can be useful for forex traders as their influence on interest rates has a knock-on effect on currency strength.

Like the others on this list, the real impact of the CPI release is only felt when the numbers radically diverge from the norm or expected release.

Impact of June 2017 CPI on USD

Source: Babypips

Any tips?

We’d love to know what your must-trade event of the year is. Tweet us at @_contentworks!

Top fundamental events week commencing 06.06.22

Speaking of events… Here’s everything you need to look out for in the world of trading this week.

Monday

No major events are planned

Tuesday

● AUD — RBA Interest Rate Decision

● CAD — Balance of Trade (APR)

Wednesday

● JPY — GDP Growth Annualised Final (Q1)

● AUD — RBA Chart Pack

● EUR — GDP Growth Rate QoQ 3rd Est (Q1); GDP Growth Rate YoY 3rd Est (Q1)

Thursday

● EUR — ECB Interest Rate Decision; ECB Press Conference

Friday

● CNY — Inflation Rate YoY (MAY)

● CAD — Employment Change (MAY); Unemployment Rate (MAY)

● USD — Core Inflation Rate YoY (MAY); Inflation Rate YoY (MAY); Michigan Consumer Sentiment Prel (JUN)

Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.

Speak soon!

The Contentworks team