Major indicators used by forex traders
The following are some of the major indicators that are utilized by the cfd trading South Africa forex traders for generating signals:
The GDP or the gross domestic product of any nation refers to data which provides a clear and most straightforward snapshots when it comes to the nation’s economic situation. The number of GDP includes everything which is produced within the borders of any nation, and because of that, it could be the best indicator of the overall country economic activity.
One drawback that gets associated with such data is that, it tends to be backward looking. All the information that is contained in it is about the last quarter, with the number itself being calculated on the basis of the information which is already available in the market. Most analysts use the data that is available in creating their own GDP number estimates with the market evaluating the real release based on the amount which is diverged from the consensus of the analyst as surveyed by the news channels plus other media sources.
The interest rates
Central banks’ interest rate decision has been important drivers for a long time when it comes to the currency trends. It is believed that, when the central banks moves in a particular direction, markets automatically react in the same strong fashion, establishing strong trends in currency pairs. On the other hand, when the government and the central banks authorities are not clear about the future and their own policies, there is rise in volatility, and sometimes it is possible that there is the disappearance of directionality in the market.
Interest rates are known to be important as they define the costs of the cheapest available borrowing to anyone who is in the economy. Because the central bank is the main authority which is controlling the supply of money at the lowest level, the traders are quite attentive to the declarations and decisions of such institutions. And the essence of the interest rates doesn’t get limited to the supply of money either. In an economy which is healthy where the demand of money happens to be in tune with the stimulatory, growth, or contra dictionary policies of the central banks are necessary for determining the industrial production unemployment, trade deficits and other statistics.
And because the interest rates are what determine the currency attractiveness for the investors and speculators throughout the world, the interest rates are quite powerful as determinants of currency flow of a nation, which by virtue of demand and supply dynamics, determine the value of the currency which is against the peers.
The producer price index or the PPI measures the pipelines price pressure at the level of the producer. The producers are known to reduce or increase the prices in accordance to various dynamics including the labor and import costs, but the consumer demands tend to be less relevant to the price choice unless there is a general demand slack