Most people like to use technical indicators for analysis because they are easy to learn.
And THE fundamentals are some macroeconomic indicators, but as we all know, technical indicators are verified by the market trend, belong to the lagging indicators!
As a result, larger investors in particular are increasingly inclined to trade on fundamentals.
Even if you don’t need fundamentals right now, you should know what some economic indicators mean because market volatility will inevitably affect small retail investors.
Let’s familiarize ourselves with common economic indicators.
1. Unemployment Rate Unemployment rate refers to the ratio between the number of unemployed people in a certain area in a certain period and the total number of people in a certain period.
Obviously, these data reflect the employment situation of a country or region and can represent the overall economic situation of a country or region.
People are most concerned about the U.S. unemployment rate and forecast related indicators such as industrial production, personal income and new home construction through the unemployment rate.
Overall, unemployment is down and a country’s economy is optimistic.
When you talk about the unemployment rate, it’s easy to think about the jobs numbers — the nonfarm payrolls, which are only part of the unemployment rate.
Non-farm data is the most concerned data.
It reflects the economic situation of a country through the development of manufacturing and service industries.
When non-farm numbers rise, that is good for a country.
2. Interest rate is a common economic indicator, which refers to the ratio of interest to principal.
Interest rates in the United States are usually set by the central bank and administered.
It is also the most important indicator of exchange rate fluctuations.
Interest rates go up, they get better, interest rates go down, the market gets worse.
Because of central bank supervision, the exchange rate of any currency will rise and fall at its equilibrium level.
When more people buy a currency, the exchange rate will rise and the central bank will lower interest rates and lower interest rates to limit the growth of the exchange rate;
Low interest rates lead to increased inflationary pressures that will raise interest rates.
Interest rate differentials between currencies also promote international capital flows.
When a country’s interest rate rises relatively, it attracts capital inflows and reduces outflows.
For the trend of interest rates, we can infer from the price trend of American bonds.
When bond prices fall, interest rates rise and the dollar does better.
3. Consumer Price Index (CPI) This indicator is closely related to ordinary people and reflects the overall price changes of final goods and services purchased by consumers.
It’s usually used for measurement.
The goods used to measure this may differ in different countries.
The United States is mainly composed of seven categories of goods, including food, alcohol and beverages, housing, clothing, transportation, medicine, health, and entertainment.
The CPI reflects a country’s purchasing power and has a mixed effect on the exchange rate.
When the CPI rises, that is, the price level rises, indicating an increase in purchasing power, an upward development of a country’s economy and an increase in the exchange rate.
However, if the CPI is too high, it will introduce state controls and interest rates will tend to fall.
4. The Producer Price Index (PPI) is an economic index that is not directly related to the average person and we know very little about it.
It represents an indicator of the price of goods sold to the commercial sector by industrial and agricultural producers.
It is more advanced than the above and is a leading indicator in the production process of goods.
PPI When the index rises, it means that the cost of producing goods increases, the corresponding overall price level will rise, and inflation may occur. It is generally believed that the economic situation is improving.
However, there are uncertain promotions and discounts from production costs to consumption, so there is also some error.
In addition to the above indicators, economic indicators affecting fundamentals include (), trade balance, current account, durable goods orders (DGO), budget deficit, etc. Compared with technical aspects, mastering fundamental analysis is conducive to medium – and long-term trading and is more suitable for investors who are short of time.
As fears of the new strain continued to ease, commodities and currencies surged on U.S. and European stock markets, while oil prices soared as much as 5 percent.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
