General Guide to Economic Releases

The following is a basic guide to economic releases:

Know the Indicators to Concentrate on

Concentrate on a specific group of indicators; don’t get bogged down with the massive amount of data that is constantly being released. Know the indicators that count and follow them. However having said this, fashions change, what may be important today maybe less important tomorrow, keep up to date with the market.

Understand the Announcement

There are several types of data that are revealed in economic announcements. Understanding the data to be released will help you understand the reactions of the market. Know the different types of data being released whether it is Growth, Inflation, Employment, Investment, Confidence or financial; the better your understanding the higher your own confidence level for trading.

Economic Calendar

Economic calendar’s specifying details of releases such as:

  • The date,
  • The time,
  • The type,
  • The previous result and
  • Forecast results are readily available.

(Refer to Economic Calendar)

It’s a good idea to be informed of releases and the time of the release; particularly the major price movers. That way you can make an informed decision to be either in or out of the market at the time of the release.

Forecast

It is important to know the market expectations for data being released. As mentioned earlier market expectations are already built into the price, so the market will likely react on the actual figure as opposed to the expected figure and not compared to the previous figure. Also the announcements particularly financial announcements are accompanied by speeches that may actually give out a lot more information than the announcement itself. For instance an expected interest rate hike may not change the market since it was expected and built into the price, however the wording following the announcement that the government will watch for further developments may make the market believe that a further interest rate hike is pending which will move the market.

As stated previously with so many announcements released constantly it is better to be informed with the major releases rather than to be informed with them all.

Economic Indicators – Types

There are two types of indicators leading and lagging indicators; leading indicators refer to economic indicators that change before the economy starts to follow a particular pattern or trend; they are used to predict changes in the economy, whilst lagging Indicators are economic indicators that change after the economy has already begun to follow a particular pattern or trend.
The economic indicators can be grouped into several groups:

  • Economic Indicators
  • Industrial Indicators
  • Investment Indicators
  • Construction Indicators
  • Inflation Indicators and
  • Employment Indicators

The following is a brief list and explanation of the leading economic indicators; it is by no means a complete list.