Economic indicators are essential to forex traders, as they represent vital data in evaluating the root strength or weakness of a currency’s economy. While their use short-term is highly subjective, with them as a gauge for long-term trends can be very effective.
These indicators usually fall under two categories: Trade Indicators and Capital (cash) flow indicators. From an economic perspective this will make sense. Trade and capital flows are a couple of sides of this balance of payments for an economy. The balance of payments for almost any economy tracks all the money moving in or out of an economy. A rise of cash moving out of an economy will likely be detrimental to the currency while an increase in the income getting into the economy will likely to be good for a currency.
Trade indicators tell us the proceedings because of the current account or first 50 % of the total amount of payments. Capital flows report what is happening within the capital account or the last half for the balance of payments. All economic indicators will offer information about one side of the balance of payments or perhaps the other and often both.