Advanced and professional traders use economic indicators to help guide their investment decisions. Changes in economic indicators can prompt an investor to re-arrange his or her portfolio positions. Economic indicators are released on a timely and predictable basis, and are used by traders around the world make investment decisions.
The currency markets in the United States open at 8:20 a.m. Eastern Standard Time. Economic indicators are released at 8:30 a.m. Eastern Standard Time on designated days of the week. Economists use economic indicator data to judge the overall health of the United States, although foreign currency traders don't usually consider all of the indicators. There are certain economic variables that foreign currency traders will use to determine the direction of the domestic currency.The monthly release of the industrial production figure is something that foreign currency traders pay close attention to. Industrial production is an industrial sector indicator and helps measure the strength of an economy by totaling the output of that nation's mines, plants and utilities. Another indicator that is used by foreign currency traders is the durable goods orders.The durable goods orders count products that are produced to exist for more than three years. An example of a durable good is a washing machine. If durable goods orders are up, it implies that the economy is healthy and consumers are spending money. This is a positive sign that the domestic currency is moving in an upward direction. Currency traders also tend to be interested in inflation indicators in order to gauge interest rate movement in an economy. Understanding pertinent economic indicators can help you judge the strength of the U.S. economy and make more informed investment decisions.
