As we saw on Friday, economic indicators can be extremely important for Forex trading because they can enable you to judge the economic health of a country and thus how its currency will perform. But there are such huge numbers of economic indicators. How do you know which to pay most attention to?
Here are some of the major economic indicators:
* Gross Domestic Product (GDP). This consists of the sum of all goods and services produced within that country by either domestic or foreign companies. This enables you to assess the pace at which the country's economy is growing or shrinking and it's seen as the broadest indicator of economic output and growth. All countries will have one of these.
* Purchasing Manager's Index (PMI) In the USA, the Institute for Supply Management releases a monthly index of national manufacturing conditions. Other countries will have something similar.
* Producer Price Index (PPI) This is a measure of price changes in the manufacturing sector. The indexes most often used for economic analysis are those for finished goods, intermediate goods and crude goods.
* Consumer Price Index (CPI) The CPI is a measure of the average price level paid by urban consumers (80 percent of the population) for a fixed basket of goods and services. This is the most effective measure of inflation in a country and thus of the country's economic health.
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