In the realm of FX trading, you have your technical traders as well as your fundamental traders.

When I first started trading a couple of years back, I was a 100% technical trader, executing all my trades based on technical factors alone, often ignoring the impact economic indicators have on the financial markets.

When I look back at that, boy was it a grave mistake on my part. Every time my trades went haywire, records shows that there was bound to be some economic reports related to that currency pair being released at that time.

Initially, what I did was to avoid trading whenever there was any important dates on the economic calendar, perhaps that is what most 100% technical traders are still doing nowadays.

But with time, my trading style gradually evolved, I noticed that instead of missing out on good opportunities to trade during these time slots, I took the extra effort to learn and understand what these economic indicators had on the financial markets.

In my book, fundamental analysis is the application of micro- and macro-economic theory to markets to predict future trends. Major fundamental forces are frequently one of the key drivers of foreign exchange rates.

And with the US being one of the major currency pair traded, it’s ain’t such a bad idea to understand more about the top 10 economic indicators that has the largest impact on the US Dollar.

For starters, you can get more information on these here.

(1) Current Account Balance

• Background : Report showing the US economy’s trade and investment relationship with the rest of the world.

• Release Date : Data is released two and a half months after the reference quarter ends.

• Release Time : 8:30am Eastern Standard Time.

• Frequency : Quarterly.

• Source : Bureau Of Economic Analysis, Commerce Department.

• Home URL : http://www.bea.gov/

• Web Release : http://www.bea.gov/newsreleases/international/transactions/transnewsrelease.htm

 

(2) Consumer Prices

• Background : Report showing the level of price inflation in retail goods and services.

• Release Date : Data is released around the 2nd or 3rd week following the month being covered.

• Release Time : 8:30am Eastern Standard Time.

• Frequency : Monthly.

• Source : Bureau of Labor and Statistics (BLS), Department Of Labor.

• Home URL : http://www.bls.gov/

• Web Release : http://www.bls.gov/cpi/

 

(3) Consumer Confidence Index

• Background : Report showing how consumers feel about jobs, the economy and spending in general.

• Release Date : Data is released last Tuesday of the month being surveyed.

• Release Time : 10:00am Eastern Standard Time.

• Frequency : Monthly.

• Source : The Conference Board.

• Home URL : http://www.conference-board.org

• Web Release : http://www.conference-board.org/economics/ConsumerConfidence.cfm

 

(4) Employment Situation Report ( Labor Report )

• Background : Report showing the number of jobs created in the US economy.

• Release Date : Data is released on the first Friday of the month.

• Release Time : 8:30am Eastern Standard Time.

• Frequency : Every month.

• Source : Bureau of Labor and Statistics (BLS), Department Of Labor.

• Home URL : http://stats.bls.gov/

• Web Release : http://stats.bls.gov/news.release/empsit.nr0.htm ( April 2, 2010 )

 

(5) Gross Domestic Product (GDP)

• Background : Report showing the rate at which the US economy is growing.

• Release Date : Data is released on the Final week of January, April, July & October.

• Release Time : 8:30am Eastern Standard Time.

• Frequency : Quarterly.

• Source : Bureau Of Economic Analysis, Commerce Department.

• Home URL : http://www.bea.gov/

• Web Release : http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

 

(6) International Trade In Goods & Services

• Background : Report showing US exports & imports of goods & services.

• Release Date : Data is released on the 2nd week of the month and refers to trade that occurs 2 months earlier.

• Release Time : 8:30am Eastern Standard Time.

• Frequency : Monthly.

• Source : Census Bureau & Bureau Of Economic Analysis, Department Of Commerce.

• Home URL : http://www.bea.gov/

• Web Release : http://www.bea.gov/newsreleases/international/trade/tradnewsrelease.htm

 

(7) Industrial Production/ Capacity Utilization

• Background : Report showing the US industry’s output and spare capacity.

• Release Date : Data is released around the 15th of the month.

• Release Time : 9:15am Eastern Standard Time.

• Frequency : Monthly.

• Source : Federal Reserve Board.

• Home URL : http://www.federalreserve.gov/

• Web Release : http://www.federalreserve.gov/releases/g17/Current/

 

(8) ISM Report-Manufacturing

• Release Date : Report showing the status of the US economy with a focus on manufacturing.

• Release Date : Data is released around the first business day after the reporting month.

• Release Time : 10:00am Eastern Standard Time.

• Frequency : Monthly.

• Source : Institute For Supply Management.

• Home URL : http://www.ism.ws/

• Web Release : http://www.ism.ws/ISMReport/index.cfm

 

(9) Productivity & Costs

• Background : Report showing the changes in the efficiency of workers who produce goods and services.

• Release Date : Data is released

• Release Time : 8:30am Eastern Standard Time.

• Frequency : Quarterly.

• Source : Bureau of Labor and Statistics (BLS), Department Of Labor.

• Home URL : http://www.bls.gov/

• Web Release : http://www.bls.gov/lpc/

 

(10) Retail Sales

• Background : Report showing US consumer spending.

• Release Date : Data is released around 2 weeks after the month ends.

• Release Time : 8:30am Eastern Standard Time.

• Frequency : Monthly.

• Source : Bureau Of The Census, Department Of Commerce.

• Home URL : http://www.census.gov/

• Web Release : http://www.census.gov/retail/marts/www/retail.html

 

Perhaps at first glance, all these seem like too much information for one to digest and you are absolutely right. It took me quite some time to actually read and understand these facts and figures even with my economic background.

But fear not, in the upcoming posts, I will share the summarized version of how these indicators impacts the US economy especially the US dollar in the most simplistic terms that even the layman can understand.

In the meantime, have a safe and profitable trading day ahead.

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