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Forex Tip: What are Economic Indicators in Trading?

According to data from the Bank of International Settlements (BIS), the Forex market is the world's most liquid, transacting over $5 trillion daily. It is a global phenomenon, easily explaining why the Forex traders keep track of the so-called 'leading economic indicators’.

If these indicators are important, then what are they?

For starters, economic indicators are from individual economies based on reports by governments and non-governmental entities. 

These parastatals or firms frequently report on specific financial information that can help paint a picture of the economy. From these data/information, economists proceed to create statistical representations which guide the speed of each economy's growth, stability, and general health. 

As expected, economic indicators heavily influence FX and Contract for Difference (CFD) prices. Considering their effect, most traders often ensure they keep tabs on leading—or influential--economic indicators, especially in anticipation of volatility down the trading road.

Some of these leading economic indicators are inflation readings, labor reports, Retail Sales, Industrial activity, GDP, Consumer Sentiment, and Interest Rate decisions.

Keen to learn the forex market? Check out our other explainer articles in our Learn Forex blog. 

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