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Macroeconomic Indicators

1. What are macroeconomic indicators?

Macroeconomic indicators are economic statistics which are released periodically by government agencies and private organizations. These indicators provide insight into the economic performance of a particular country or region, and therefore can have a significant impact on the Forex market.

2. Gross Domestic Product

Country: USA

Definition: Gross Domestic Product (GDP) is the total market value of all goods and services produced within a country's borders in a particular time period, including production by foreign companies working in the country's territory, but excluding production by domestic companies abroad.

Description: The GDP report is one of the most important indicators of the strength of the American economy. It shows the market value of all goods and services produced within the country in a certain time period. The main components of GDP are consumption, investment, net exports and government spending and inventories; with individual consumption generally making up two-thirds of US GDP.

Influence: A rise in GDP indicates that the American economy is growing. This makes it more attractive to investors and tends to strengthen the US dollar.

Market Impact: High

Released: GDP forecasts are released quarterly (January, April, July, October) on the last working Thursday of the quarter (or on Wednesday, if it happens to be the last working day of the quarter, etc.). Revisions are released a month later, followed by the real GDP numbers a month after that. All GDP reports are released at 13:30 GMT.

Source: US Census Bureau

3. 3-Month LIBOR Range (Switzerland)

Country: Switzerland

Definition: The London Interbank Offered Rate (LIBOR) is the interest rate at which major banks distribute loans in the London interbank money market. The 3-month Swiss Franc LIBOR is the average interest rate banks in London charge for 3-month loans in CHF.

Description: The 3-month LIBOR is used as a reference rate in Swiss monetary policy. The Swiss National Bank sets a target range for this rate extending over 1 percentage point and aims to keep the LIBOR within this range. LIBOR rates are fixed daily at 11:00 GMT. They are calculated as the average of the last ten quotes offered by sellers.

Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the Swiss LIBOR usually leads to an increase in capital flowing into Switzerland and provides a boost for the Swiss franc in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the franc in the long run.

Market Impact: High

Released: Quarterly (March, June, September, December), usually on the third Thursday of the month

Source: The Swiss National Bank

4. Durable Goods Orders

Country: USA

Definition: This index measures the volume of orders of durable goods, or goods whose intended lifespan is three years or more.

Description: The Durable Goods report is considered a leading indicator of US manufacturing activity. An increase in orders means more future business for manufacturers. The market often moves on this report in spite of its high volatility. Approximately 3/5 of all durable goods orders are for cars and trucks, with building materials, furniture, and household items accounting for most of the remaining part.

Influence: The Durable Goods report is often able to detect shifts in the US economy up to six months in advance. A decline in orders may signal an economic slowdown (and drop in the US dollar), whereas an increase could signal expansion (and rise in the US dollar).

Market Impact: Medium

Released: Monthly, during the final week of the month at 13:30 GMT.

Source: US Census Bureau

5. Leading Indicators Index

Country: USA

Definition: This index factors in 10 leading indicators, or economic indicators that tend to change before the economy as a whole changes.

Description: The Leading Indicators Index provides an overview of the American economy, and is comprised of the following 10 components: 1) The average hours worked per week by production workers in manufacturing industries; 2) The average number of new claims filed for unemployment insurance per week; 3) Manufacturers' new orders for consumer goods; 4) The relative speed at which vendors can deliver orders to industrial companies; 5) New orders received by manufacturers in non-defense capital goods; 6) The number of residential building permits issued; 7) The change in the stock market; 8) The inflation-adjusted M2 money supply; 9) The yield curve (the difference between long term and short term interest rates); and 10) The index of consumer expectations. The Leading Indicators Index has a good track record of predicting dips in the US economy. As a rule of thumb, if the index drops three months in a row, a recession is likely to follow. From 1952 to 1998, the index predicted ten recessions in the US economy, of which seven actually occurred. The Leading Indicators Index can signal a change from economic growth to recession around ten months in advance, but is only able to predict a change from recession to growth 1-2 months in advance.

Influence: An increase in this index tends to boost the US dollar.

Market Impact: Low

Released: At the beginning of each month at 15:00 GMT

Source: The Conference Board (New York)

6. Chicago PMI Index

Country: USA

Definition: The Chicago Purchasing Managers' Index is derived from a survey of purchasing managers in the Chicago area regarding their acquisition of goods and services. Investors refer to this indicator, since the economy of the Chicago area tends to be reflective of the American economy as a whole.

Description: The Chicago PMI gauges manufacturing conditions in the Chicago private sector. A PMI reading above 50 is said to signal growth in the US economy, whereas a reading below 50 signals economic contraction.

Influence: Chicago PMI index readings above 50 indicate industrial growth and tend to boost the US dollar.

Market Impact: Medium

Released: On the last business day of every month at 15:00 GMT

Source: The Purchasing Managers Association of Chicago (USA)

7. Philadelphia Fed Index

Country: USA

Definition: This index reflects a survey of manufacturers from the Philadelphia (USA) area about their attitudes towards the current economic climate.

Description: The Philadelphia Fed Index is based on the responses of roughly 100 Philadelphia-area manufacturers and reflects how they feel about the current economic situation and where they think the economy is heading in the next six months. A reading below 0 may point towards a slowdown in the American economy. The Philadelphia index comes out just before the ISM (Institute for Supply Management) index and is often looked at as a valuable predictor of ISM results.

Influence: An increase in this index may lead to a strengthening of the US dollar.

Market Impact: Low

Released: The third Thursday of every month at 15:00 GMT

Source: The Federal Reserve Bank of Philadelphia (USA)

8. Consumer Confidence Index

Country: USA

Definition: This index is based on a survey designed to gauge how much confidence consumers have in the economy, as expressed by their spending and savings activities.

Description: The Consumer Confidence Index survey has been carried out on a monthly basis since 1967 to determine how optimistic consumers are about the state of the economy. The index is benchmarked to a 1985 reading of 100 and is updated monthly, based on a survey of 5,000 US households. Participants are asked for their opinions regarding the current business conditions and employment market (forming the Present Situation Index, weighted as 2/5 of CCI) as well as their expectations for the upcoming six months for business conditions, the employment market and family income (forming the Expectations Index, weighted as 3/5 of CCI). Consumer Confidence is considered a leading indicator and is used to forecast the direction of the American economy.

Influence: An increase in the index reflects favorable conditions throughout the economy and tends to strengthen the US dollar as a result.

Market Impact: Low

Released: Around the 20th of each month at 15:00 GMT

Source: The Conference Board (New York)

9. University of Michigan Consumer Confidence Index

Country: USA

Definition: This is a measure of consumer confidence conducted by the University of Michigan.

Description: The University of Michigan Consumer Confidence Index reflects a monthly telephone survey of 500 or so US households. The survey consists of two components: sentiment (40% of the index) and expectations (60%). Participants are asked about the current economic climate, where they think the economy as a whole is heading and what they think about their personal financial situation.

Influence: An increase in the index is a positive sign for economic growth, whereas a decrease indicates a possible slowdown. The USD may advance on a positive reading.

Market Impact: Medium

Released: Twice a month: a preliminary report is released around the 15th, the final one is released two weeks later at 14:45 GMT

Source: The University of Michigan (USA)

10. Consumer Price Index

Country: USA

Definition: The Consumer Price Index (CPI) measures the change in the cost of consumer goods and services.

Description: The Consumer Price Index is used as a measure of US inflation. The index tracks changes in the market price of goods and services by measuring price changes for a particular "basket" of goods from one period to the next in the same geographic area. The basket includes items such as food, clothing, educational expenses and utilities. In addition to being a key measure of inflation, CPI is also used to determine the official US poverty threshold and how government money should be allocated. The US Department of Labor bases the index on the prices of goods and services in eighty-five American cities. The index does not take into account discounts or rapidly fluctuating prices.

Influence: In normal economic conditions, an increase in CPI leads to growth in interest rates, which in turn boosts the US dollar, as the higher rates make investment more attractive.

Market Impact: High

Released: From the 15th-21st of each month (on a Tuesday or Thursday), soon after the release of PPI, at 13:30 GMT

Source: US Bureau of Labor Statistics

11. Industrial Production Index

Country: USA

Definition: The Industrial Production Index (IPI) measures the output of US factories, mines and utilities.

Description: IPI measures the strength of American industries. By charting changes in the level of industrial production, the index provides an overview of the health of US industry as a whole and also provides investors with a sense of which industries are growing and which are contracting. With industrial production making up almost 40% of total economic activity, investors keep a close eye on monthly changes in IPI.

Influence: Increased industrial output leads to an increase in the value of money, which boosts the stock market and brings the bond market down. However, analyzing the Industrial Production Index is fairly straightforward, so sharp changes in the index have already been reflected as gradual change in the markets well in advance.

Market Impact: Medium

Released: The middle of each month at 14:15 GMT

Source: The Federal Reserve

12. Capacity Utilization

Country: USA

Definition: Capacity Utilization measures the extent to which a nation uses its installed productive capacity.

Description: The Capacity Utilization report shows the relationship between actual output and potential output in American industries. If market demand grows, utilization will increase accordingly. The optimal value for this indicator is 81.5. A lower value signals economic slowdown, whereas a value higher than 85 leads to the risk of inflation through bottlenecks and the limited delivery of goods.

Influence: When CU approaches 85, it is treated as a signal of possible inflation and may lead to a drop in the US dollar.

Market Impact: Low

Released: Released in the middle of each month, at 14:15 GMT (together with the Industrial Production Index)

Source: The Federal Reserve

13. Personal Income

Country: USA

Definition: Personal Income is a measure of pre-tax household income from all sources.

Description: This indicator is estimated using payrolls and earnings data from employment records. It also includes income from other sources, including rent, interest, dividends and government subsidy payments. Personal Income indicates future growth in consumer demand. It is reported along with with Personal Spending.

Influence: An increase in Personal Income may trigger consumption, which may in turn boost the USD.

Market Impact: Low

Released: After the 20th of each month at 13:30 GMT

Source: US Bureau of Economic Analysis

14. IFO Business Climate Index

Country: Germany

Definition: Released by the IFO Institute for Economic Research in Munich, this index serves as a leading indicator for the German economy.

Description: The IFO Business Climate Index is based on a monthly survey of German firms about the current and future business climate in Germany. The index is based on a benchmark of 100.

Influence: An increase may indicate a strengthening of the euro.

Market Impact: Medium

Released: Monthly around the 25th to 27th at 08:00 GMT

Source: IFO Institute for Economic Research (Munich)

15. ZEW Indicator of Economic Sentiment

Country: Germany

Definition: The ZEW Indicator of Economic Sentiment is based on a monthly survey conducted by the Center for European Economic Research (ZEW) to measure economic sentiment among German financial professionals.

Description: The ZEW Indicator is based on an investor confidence survey given to German analysts and investors. The participants are asked to give their opinion on the current economic climate and the future direction of the economy. The reading is based on the ratio of optimistic to pessimistic responses. If the majority of participants are optimistic, the reading will be above zero. If the response is more pessimistic, the reading will be below zero.

Influence: The ZEW Indicator is used to evaluate the prospects of the German economy. A positive reading indicates a strengthening of the euro.

Market Impact: Medium

Released: On the third or fourth Tuesday of each month at 16:00 GMT

Source: Center for European Economic Research (Germany)

16. Tankan Survey

Country: Japan

Definition: This indicator is based on a survey designed to measure Japanese business sentiment.

Description: The Tankan Survey polls anywhere from eight to ten thousand Japanese businessmen on current trends and conditions in Japanese business as a whole, as well as in their respective industries. Participants are asked about their expectations for the upcoming quarter and year. The companies polled represent a sample of businesses of various sizes and include several of the largest Japanese firms, as well as a number of medium and small businesses.

Influence: A positive reading may indicate a strengthening of the JPY.

Market Impact: High

Released: Quarterly: at the beginning of April, July and October, in mid-December

Source: The Bank of Japan

17. Official Cash Rate (New Zealand)

Country: New Zealand

Definition: This is the interest rate paid by New Zealand banks in the overnight money market.

Description: The Reserve Bank of New Zealand controls the official cash rate and uses it as a tool to keep inflation under control. The Reserve Bank accepts deposits at a rate 0.25% lower and lends at a rate 0.25% higher than the cash rate. Decisions regarding the OCR are made during meetings of the Reserve Bank's Board of Governors.

Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the OCR usually leads to an increase in capital flowing into New Zealand and provides a boost for the New Zealand dollar in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the New Zealand dollar in the long run.

Market Impact: High

Released: Released eight times per year

Source: Reserve Bank of New Zealand

18. Initial Claims (Jobless Claims)

Country: USA

Definition: This weekly report tells how many people filed for unemployment benefits during the prior week.

Description: The Initial Jobless Claims Report provides insight into the US job market. An increase in jobless claims is a sign of a weakening economy, whereas a decrease signals economic expansion and an improving job market. Due to the high volatility of the weekly report, many investors prefer to use the four-week moving average.

Influence: A decrease in jobless claims indicates growth in the economy, which may boost the US dollar.

Market Impact: Low

Released: Every Thursday at 13:30 GMT

Source: US Department of Labor

19. Current Account (Balance of Payments)

Country: USA

Definition: This indicator measures the flow of goods, services, income and transfer payments into and out of the US.

Description: The Current Account Balance is a measure of US foreign trade. It is the sum of the trade balance (exports minus imports), net factor income (dividends, interest) and net transfer payments (such as foreign aid).

Influence: A current accounts surplus tends to strengthen the US dollar.

Market Impact: High

Released: Quarterly, around the middle of the month at 15:00 GMT

Source: The Federal Reserve

20. Productivity

Country: USA

Definition: Productivity shows how efficiently a workforce is producing goods and services.

Description: The Productivity report shows changes in production volume relative to labor costs and can be an early indicator of inflation. The higher the level of production relative to labor costs, the higher productivity. This index is followed closely by investors, but can be misleading. Layoffs may lead to increased productivity as measured per worker. Strikes can also influence productivity figures.

Influence: An increase in productivity is generally a positive sign for the US economy, strengthening the US dollar.

Market Impact: Medium

Released: Measures are regularly revised as more complete information becomes available. The measures are first published within 40 days of the end of the reference period. Revised figures are published 30 days later. A second revision may then be published after an additional 60 days.

Source: US Bureau of Labor Statistics

21. Factory Orders

Country: USA

Definition: The Factory Orders Report measures the dollar volume of new orders, shipments, unfilled orders, and inventories reported by domestic manufacturers and is expressed both as a raw figure and as a percentage change from the previous month.

Description: This indicator signals industrial demand for durable (understood as goods whose intended lifespan is three years or more) and non-durable goods. An increase in orders means a likely increase in production, which has a positive effect on the US economy. By the same token, a decrease in orders signals an impending decrease in production.

Influence: An increase in factory orders is a positive sign for the future growth of the economy and tends to strengthen the US dollar.

Market Impact: Low

Released: Monthly at 15:00 GMT

Source: US Census Bureau

22. Official Сash Rate (Australia)

Country: Australia

Definition: This is the interest rate paid by Australian banks in the overnight money market.

Description: The OCR essentially determines the cost of borrowing money in Australia. The Reserve Bank of Australia uses open market operations (the buying and selling of government securities) to hit their OCR target.

Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the OCR usually leads to an increase in capital flowing into Australia and provides a boost for the Australian dollar in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the Australian dollar in the long run.

Market Impact: High

Released: Released monthly (except in January) on one of the first days of the month at 04:30 GMT

Source: Reserve Bank of Australia

23. Repo Rate (Great Britain)

Country: Great Britain

Definition: The Repo Rate is the short-term interest rate at which the Bank of England lends to banks and other financial institutions (usually on an overnight basis). Repo is short for "repurchase agreement", a contract whereby the seller is obliged to repurchase a security from the buyer at a set price on a specific date in the future.

Description: The Repo Rate is the most important interest rate in Great Britain. The Bank of England has set 2% as the upper limit for inflation in Great Britain. If prices rise more than 2% per year, the Bank of England is likely to intervene by increasing interest rates.

Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the Repo Rate usually leads to an increase in capital flowing into Britain and provides a boost for the pound in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the pound in the long run.

Market Impact: High

Released: Monthly, usually on the first Thursday of the month at 11:00 GMT (BOE minutes are released 2 weeks after the rates are announced, usually on a Wednesday)

Source: The Bank of England

24. Non-farm Payrolls

Country: USA

Definition: The Non-farm Payrolls report gives an overview of the employment situation in the US, excluding agriculture.

Description: The Non-farm Payroll figures represent the country's total number of workers outside the agricultural sector. The report is derived from a survey of approximately 400,000 businesses and 50,000 homes and is updated on a monthly basis. The data is adjusted to account for seasonal employment or changes in the formula. The Non-Farm Payrolls Report, along with the Unemployment Rate, Average Work Week, and Hourly Earnings report, provides insight into US inflation and which direction interest rates are heading.

Influence: Increases in this indicator indicate economic growth.

Market Impact: High

Released: Monthly, usually on the first Friday of the month at 13:30 GMT

Source: US Bureau of Labor Statistics

25. Retail Sales

Country: USA

Definition: Retail Sales is a measure of total receipts for retail stores and reflects the spending patterns of US consumers.

Description: Retail Sales accounts for durable goods (40%) and non-durable goods (60%), and, as a whole, makes up two-thirds of US GDP. An increase in Retail Sales is generally viewed as a sign of rising demand if the increase appears not to be the result of rising gas and food prices.

Influence: Market reaction on retail sales data may be quite strong as this data is quite difficult to forecast. Low sales may signal an economic slowdown and a drop in the US dollar.

Market Impact: Medium

Released: Monthly around the 13th at 13:30 GMT

Source: US Census Bureau

26. Federal Funds Rate (USA)

Country: USA

Definition: The Federal Funds Rate (FFR) is the interbank interest rate in the Federal Reserve System.

Description: The FFR is decided on by the Federal Open Market Committee (FOMC). Although the yield of financial instruments is determined by market forces, interest rates can provide insight into the direction of the markets. The correlation between the FFR and bond yields is very high as rate hikes tend to lead to an outflow of capital from the stock market into the bond market.1

Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the FFR usually leads to an increase in capital flowing into the US and provides a boost for the dollar in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the dollar in the long run.

Market Impact: High

Released: Eight times per year, about once every seven weeks, usually on Tuesdays at 19:15 GMT

Source: The Federal Reserve

27. Refinancing Rate (Euro Zone)

Country: Euro Zone

Definition: The Refinancing Rate is the rate at which banks may make overnight deposits in the Eurosystem.

Description: The Refinancing Rate is the main interest rate in Europe. The ECB has set a goal to keep inflation under 2%. Accordingly, if consumer prices are growing more than 2% per year, the ECB will likely intervene and raise interest rates.

Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the Refinancing Rate usually leads to an increase in capital flowing into the Eurozone and provides a boost for the euro in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the euro in the long run.

Market Impact: High

Released: Monthly, usually on the first Thursday of the month at 11:45 GMT. The ECB's president's press briefing begins at 12:30 GMT.

Source: The European Central Bank

28. Tradе Balance

Country: USA

Definition: Trade Balance is the difference between a country's imports and exports.

Description: The US Trade Balance is calculated by subtracting aggregate imports from aggregate exports. Investors also keep track of imports and exports individually for the respective effects each has on the economy. If exports are greater than imports, there is said to be a "trade surplus". When imports are greater than exports, there is said to be a "trade deficit". A large positive trade balance (surplus) indicates an inflow of foreign currency into the United States, boosting the dollar. In recent years, the United States has been running a trade deficit. It should also be noted that trade balance figures have a big impact in GDP forecasts, as imports and exports are factored into GDP calculations.

Influence: A decrease in the US trade deficit strengthens the US dollar.

Market Impact: High

Released: The third week of every month (usually on Tuesday or Thursday) at 13:30 GMT

Source: US Census Bureau

29. Unemployment Rate

Country: USA

Definition: The Unemployment Rate is a measure of the percentage of unemployed workers in the US workforce.

Description: The Unemployment Rate is regarded as one of the most important economic indicators. It is calculated monthly by surveying a random sample of approximately 60,000 households and 375,000 businesses. Only those actively looking for work are included in the figures. The natural rate of unemployment is considered to be about 4-5%. Wages increase faster during periods of low unemployment, leading to inflation.

Influence: When an interest rate hike is expected, a decrease in unemployment may boost the USD.

Market Impact: Medium

Released: The first Friday of every month at 13:30 GMT

Source: US Bureau of Labor Statistics

30. Overnight Call Rate Target (Japan)

Country: Japan

Definition: The Overnight Call Rate Target determines the interest rate banks will pay in the Japanese overnight market. It is the most important interest rate in Japan.

Description: This is the average interest rate the Bank of Japan is looking to see on short-term deposits. The Bank of Japan's board of governors decides what The Overnight Call Rate Target should be, then uses open market operations to hit this target.

Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the Overnight Call Rate Target usually leads to an increase in capital flowing into Japan and provides a boost for the yen in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the yen in the long run.

Market Impact: High

Released: Released once a month (twice in certain instances)

Source: The Bank of Japan

31. Overnight Rate Target (Canada)

Country: Canada

Definition: The Overnight Rate Target is the interest rate the Bank of Canada is looking to see on short-term deposits in the overnight money market. It is the most important rate in Canada.

Description: The Overnight Rate Target is set in the middle of a 0.5-percentage point band. The BOC uses open market operations to keep the interest rate within this band.

Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the Overnight Rate Target usually leads to an increase in capital flowing into Canada and provides a boost for the Canadian dollar in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the Canadian dollar in the long run.

Market Impact: High

Released: Eight times per year (dates determined by the Bank of Canada)

Source: The Bank of Canada

32. Beige Book

Country: USA

Definition: Also called the Summary of Commentary on Current Economic Conditions, the Beige Book is a summary of anecdotal information collected by each Federal Reserve Bank in its district from business contacts, economists and financial experts.

Description: The report includes commentary on the current state of retail sales, consumption, manufacturing, the labor market, real estate, banking, finance, agriculture, energy and natural resources. The information in the Beige Book report is broken down by region and economic sector.

Influence: The Beige Book is used to evaluate the economic efficiency of different US regions and to predict future Federal Open Market Committee (FOMC) monetary policy decisions. When there is speculation of possible rate changes, for example, close attention is paid to the section on wages and price levels.

Market Impact: Low

Released: Eight times per year on Wednesdays at 19:15 GMT, two weeks before every FOMC meeting

Source: The Federal Reserve

Please Note:

  1. This correlation hasn't held up in recent times.
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