Forex Trading: Common Economic Indicators for You and Your Forex Broker, Jobless Claims, Fed Index



Posted: Monday, March 07, 2011

by Patrick Kalashnikov
vertiFX

Initial Jobless Claims

One important factor for determining currency values for forex trading is the employment market in that country. The Initial Jobless Claims Report provides this information and is an economic indicator. This report is released by the Employment and Training Administration of the Department of Labor each Thursday, providing information from the week before ending on Saturday.

The Initial Jobless Claims Report releases data regarding how many individuals have filed for unemployment benefits each week, which can indicate the overall status of that country’s economy. If the number of unemployment benefits increases, it could indicate that the economy is struggling while more people are losing their jobs and new positions are not being filled, therefore indicating that the value of the currency will decrease. Conversely, if the numbers are decreasing, it may mean that more jobs are being created and the economy is on the upswing.

Investors will typically find trends in this information, such as taking the four week average rather than a week-by-week basis. This gives a better long term market analysis, rather than the possibility of a weekly fluke. In addition, a sound piece of advice is not to overemphasize this data. Investors typically don’t think that anything less than 30,000 unemployment claims could be normal fluctuations, but over that number could signify a drastic economic shift.

Anyone interested in researching this information can visit the Department of Labor’s website on Thursday for the new report.

Philadelphia Fed Index

The Philadelphia Federal Index (also referred to as the Philadelphia Fed Index or the Business Outlook Survey) is a monthly report released by the Federal Reserve Bank of Philadelphia on the third week of the month and includes information about the previous month. The report deals with expansion and contraction in the manufacturing industry. A forex broker or anyone heavily involved with forex trading will typically access this report as an indicator.

Participating manufacturing industries from Philadelphia, New Jersey, and Delaware are administered survey questions regarding the overall changes in their business activities, the results of which are released in the Philadelphia Fed Index. Using the survey as a basis, the report generates a positive or negative number. A positive number usually indicates that the business is expanding, while a number below zero indicates contraction. The report further breaks down these numbers by comparing months and providing a six-month overview.

This report is relevant because it can reveal trends of the entire country. If one local area is doing well or poorly, it may indicate similar data from the rest of the United States. FX trading investors use the Philadelphia Fed Index to predict the state of the economy nation-wide.

Ivey Purchasing Manager’s Index

Similar to the Philadelphia Fed Index, the Ivey Purchasing Manager’s Index is used in forex trading to predict the economic trends of a country in order to determine whether that country’s currency will increase or decrease in value. The Ivey Purchasing Manager’s Index measures the change in purchases made by corporate executives. It is intended to help executives determine economic growth. If the optimal conditions are predicted, then businesses will increase spending in order to keep up with demand for their goods. If the company is producing more goods, it is fair to say that the economy is doing well and their currency is a solid investment.

Patrick Kalashnikov is a freelance writer who's got a bunch of great info on general forex trading and popular forex trading platforms. To get in touch with a forex broker that offers free practice accounts, visit http://www.vertifx.com
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