THE LEADING ECONOMIC INDICATORS THE COMPLETE 2020 GUIDE TO EVALUATE LEADING ECONOMIC INDICATORS
Introduction • Since the foreign exchange market has economic principles as its guiding light, it is only fitting that we apply them during trading decisions as well. Economists usually group macroeconomic statistics in one of three categories: leading, lagging, or coincident. In terms of the forex market and this article, in particular, we shall touch base on what the leading indicators for economic growth are.
What makes up the leading economic index? • The index for leading economic indicators has been created by the US Conference Board as a part of a greater and grander analytic system that aims to show inflection points in economic growth. In a nutshell, it was made with the intention to summarise future economic performance through its goal is showing inflection points in economic data. This is particularly useful if you want to get a feel as to where the economy is gearing to turn to. • For those that are unfamiliar with the leading economic index, all the readily available information may tend to be overwhelming. To help break it down for you, we have listed all of its parts so that you know which elements to look out for next time: 1. Average consumer expectations for business conditions 2. Average weekly initial claims for unemployment insurance 3. Interest rate spread, 10-year Treasury bonds less federal funds 4. Average weekly hours, manufacturing 5. Leading Credit Index 6. ISM Index of New Orders 7. Stock Prices 8. Building permits, new private housing units 9. Manufacturers’ new orders, nondefense capital goods excluding aircraft orders 10. Manufacturers’ new orders, consumer goods, and materials.
How should you use the Leading Economic Indicators for trading? • The leading economic index features 10 subcomponents that you may gauge before they are even released. Similar to any other economic data that is consistently released, having the leading economic index in your toolbox can present you with many opportunities. Since some of the 10 subcomponents can be analysed by veteran analysts in advance, you will not be getting any sudden surprises. • If you know what to look for in the leading economic index, then you are well on your way to mastering this index to make even better trades! • LEARN TO MAKE FROM PROFITS FROM LEADING ECONOMIC INDICATORS
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