Economic Indicators provide insights into an economy's overall health, performance, and trends. Economic Indicators that traders closely watch include Gross Domestic Product (GDP), unemployment rates, inflation, consumer confidence, and manufacturing activity.
Monitoring Economic Indicators
Traders closely monitor these indicators to anticipate changes in monetary policy, interest rates, and overall economic conditions, which can significantly impact currency prices. A stronger-than-expected release of GDP can result in a currency's value quickly rising. Conversely, rising unemployment rates may signal economic weakness, potentially resulting in a fall in a currency's value. While challenging, understanding and interpreting economic indicators can help judge the future trend of a currency's value.