Economic data that a trader should be able to understand.
Part 1.
No matter how well you use technical analysis, you should still follow the fundamental news.
Fundamental news can push the market against you and destroy any pattern and even reverse the trend.
Every professional trader uses an economic calendar for this purpose.
Thanks to the data from the economic calendar, you can predict when the market may start behaving unusually, and with proper analysis of the reports, you will be able to determine the future price movement.
Today we will talk about these reports, what they mean and what to do with them.
Employment
The employment data takes into account the total number of employees – both ordinary employees and self-employed citizens.
Employment data are important because they are an indicator of the current potential of a country's economic productivity. The production of goods and services directly depends on how many people have the desire and opportunity to work. If all of them are employed, it means, obviously, the country is not able to produce more, because it has no unused labor force.
Employment is highly cyclical because when demand for goods and services increases, companies tend to increase working hours instead of hiring new workers. When the economy begins to deteriorate, companies prefer not to reduce working hours, but to get rid of extra workers, because layoffs allow you to save on pension and other deductions, which are usually very expensive.
Economists track the addition of working hours and the number of overtime hours, defining them as positive changes for the employment sector. If these indicators begin to fall, it may mean a slowdown in the economy or a potentially possible entry into the recession phase.
Unemployment
The unemployment data takes into account the total number of people who can and want to work if they have the opportunity, but do not have a job.
Unemployment is highly cyclical for the same reasons as employment. They are opposites of each other.
These data are important because they are an indicator of excess labor, which economists tend to regard as wasted resources. Unemployment is also called unemployment.
There is a natural unemployment rate. Companies can only hire a certain number of people. At some point, the competition for employees becomes very high, because there are few vacancies. This, in turn, increases inflation, as hours worked and average hourly wages increase. People are starting to have more disposable income that they can spend inside the economy on expensive items such as cars and houses, which will cause inflation to rise.
The inflation rate is of great interest to us, as central banks pay a lot of attention to it. Keeping inflation at the levels outlined in their policies and financial mandates is part of their job. Too high or too low inflation will force the central bank to intervene in financial markets.
Personal income and Disposable Income
In these data, the total income of the population after deduction of taxes to the state is taken into account.
They are important because they are the basis for consumption and for personal savings within the economy. Personal consumption and spending account for about half to two-thirds of GDP in developed countries, which makes these indicators extremely important.
When people's personal incomes grow, chances are high that they will start spending more money inside the economy. When there is a shortage of personal income, it is very unlikely that people will have a desire to spend the little money they have on goods that are not necessary for survival.
Economists pay attention to the steady growth of real personal income. If it is too fast, it will cause a sharp increase in inflation. If it is too slow, it can lead to deflation, which is very bad for the economy (and for the positions of bankers of the central bank).
By the way, we will devote a separate article to inflation and deflation, as this is a very important topic. Don't be afraid, we've got it all covered!
Consumer and Personal Expenditure, Private Consumption
In this type of data, total expenses are measured. In other words, how much each person consumes on average.
They are important because they are a key component of GDP along with personal and disposable income, as they show how much money each person is ready to spend on goods and services at the moment – both necessary and just desired. Don't forget, spending is something very serious for developed countries.
Economists track the dynamics of changes in real interest rates in order to adjust their views on the economy. For example, if expenses grow by 6%, and prices rise by only 4%, then real expenses have increased by only 2%.
Positive and negative changes in spending on durable goods (for example, cars, washing machines, agricultural equipment) can be an early signal of changes in the economic situation. An increase in the number of purchases is regarded as a positive phenomenon, while a decrease in purchases is generally considered negative for the economy.
an overview of the rest of the economic data can be found in the next article.
all the best.
No matter how well you use technical analysis, you should still follow the fundamental news.
Fundamental news can push the market against you and destroy any pattern and even reverse the trend.
Every professional trader uses an economic calendar for this purpose.
Thanks to the data from the economic calendar, you can predict when the market may start behaving unusually, and with proper analysis of the reports, you will be able to determine the future price movement.
Today we will talk about these reports, what they mean and what to do with them.
Employment
The employment data takes into account the total number of employees – both ordinary employees and self-employed citizens.
Employment data are important because they are an indicator of the current potential of a country's economic productivity. The production of goods and services directly depends on how many people have the desire and opportunity to work. If all of them are employed, it means, obviously, the country is not able to produce more, because it has no unused labor force.
Employment is highly cyclical because when demand for goods and services increases, companies tend to increase working hours instead of hiring new workers. When the economy begins to deteriorate, companies prefer not to reduce working hours, but to get rid of extra workers, because layoffs allow you to save on pension and other deductions, which are usually very expensive.
Economists track the addition of working hours and the number of overtime hours, defining them as positive changes for the employment sector. If these indicators begin to fall, it may mean a slowdown in the economy or a potentially possible entry into the recession phase.
Unemployment
The unemployment data takes into account the total number of people who can and want to work if they have the opportunity, but do not have a job.
Unemployment is highly cyclical for the same reasons as employment. They are opposites of each other.
These data are important because they are an indicator of excess labor, which economists tend to regard as wasted resources. Unemployment is also called unemployment.
There is a natural unemployment rate. Companies can only hire a certain number of people. At some point, the competition for employees becomes very high, because there are few vacancies. This, in turn, increases inflation, as hours worked and average hourly wages increase. People are starting to have more disposable income that they can spend inside the economy on expensive items such as cars and houses, which will cause inflation to rise.
The inflation rate is of great interest to us, as central banks pay a lot of attention to it. Keeping inflation at the levels outlined in their policies and financial mandates is part of their job. Too high or too low inflation will force the central bank to intervene in financial markets.
Personal income and Disposable Income
In these data, the total income of the population after deduction of taxes to the state is taken into account.
They are important because they are the basis for consumption and for personal savings within the economy. Personal consumption and spending account for about half to two-thirds of GDP in developed countries, which makes these indicators extremely important.
When people's personal incomes grow, chances are high that they will start spending more money inside the economy. When there is a shortage of personal income, it is very unlikely that people will have a desire to spend the little money they have on goods that are not necessary for survival.
Economists pay attention to the steady growth of real personal income. If it is too fast, it will cause a sharp increase in inflation. If it is too slow, it can lead to deflation, which is very bad for the economy (and for the positions of bankers of the central bank).
By the way, we will devote a separate article to inflation and deflation, as this is a very important topic. Don't be afraid, we've got it all covered!
Consumer and Personal Expenditure, Private Consumption
In this type of data, total expenses are measured. In other words, how much each person consumes on average.
They are important because they are a key component of GDP along with personal and disposable income, as they show how much money each person is ready to spend on goods and services at the moment – both necessary and just desired. Don't forget, spending is something very serious for developed countries.
Economists track the dynamics of changes in real interest rates in order to adjust their views on the economy. For example, if expenses grow by 6%, and prices rise by only 4%, then real expenses have increased by only 2%.
Positive and negative changes in spending on durable goods (for example, cars, washing machines, agricultural equipment) can be an early signal of changes in the economic situation. An increase in the number of purchases is regarded as a positive phenomenon, while a decrease in purchases is generally considered negative for the economy.
an overview of the rest of the economic data can be found in the next article.
all the best.
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🔻FREE Telegram channel🔻
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🔻Contact for Paid SIGNALS🔻
t.me/DeGRAMForex
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