The Effects of the EU Economic Indicators in Forex Trading
Learn in this article about the main EU economic reports and indicators including interest rates, inflation, employment and how they affect the Forex market.
European Union Economic Indicators would include the Economic Reports listed below.
Interest Rates
| Report | Impact | Big Picture | Currency Effect | Description |
|---|---|---|---|---|
 ECBRate Announce | High |  | if actual>forecast, bullish for EUR | The six members of the European Central Bank (ECB) Executive Board and the 16 governors of the euro area central banks vote on where to set the rate. Traders watch interest rate changes closely as short-term interest rates are the primary factor in currency valuation |
| ECB President Speaks | if actual > forecast, bullish for EUR | As head of the ECB, which sets short term interest rates, the president has a major influence over the value of the euro. Traders watch his speeches closely as they are often used to drop subtle hints regarding future monetary policy and interest rate shifts |
Inflation
| Report | Impact | Big Picture | Currency Effect | Description |
|---|---|---|---|---|
| EU Consumer Price Index (CPI) and Core | High |  | if actual > forecast, bullish for EUR | Measures the change in the prices of a basket of goods and services purchased by consumers, and thus designed to measure price inflation. |
| EU CPI Core | if actual > forecast, bullish for EUR | Measures the change in the prices of a basket of goods and services, excluding food and energy. | ||
| EU Producer Price Index (PPI) | High | if actual > forecast, bullish for EUR | Measures the change in the price of goods sold by manufacturers. | |
| EU Labor Costs | Medium | if actual > forecast, bullish for EUR | Measures the change in the price businesses pay for labor, excluding overtime, and a leading indicator of inflation. | |
| EU M3 | Low | Measures the change in the total quantity of domestic currency in circulation and deposited in banks, with increasing supply leading to additional spending, which in turn leads to inflation. | ||
 GE CPI & Core | Low | if actual > forecast, bullish for EUR | Measures the change in the prices of goods and services purchased by consumers. | |
 FR CPI | Low | if actual > forecast, bullish for EUR | Measures the change in the prices of goods and services purchased by consumers. |
Balance of Payments
| Report | Impact | Big Picture | Currency Effect | Description |
|---|---|---|---|---|
| EU Trade Balance | Medium |  | if actual > forecast, bullish for EUR | Exports minus imports. Trade surplus means that the euro-zone is exporting more than its importing, which is good for Euro. |
| EU Current Account | Medium |  | if actual > forecast, bullish for EUR | Measures the flow of goods, services, income and transfer payments moving into and out of a country. More money flowing into the zone (a current account surplus) means more people have been required to buy euros. More money flowing out of the zone (a current account deficit) leads to currency depreciation because the currency is leaving the country to make payments in a foreign currency. |
| GE Trade Balance | Medium |  | Exports minus imports. Germany is the largest European economy and exports are a big component. Trade surpluses outside the euro zone help strengthen the euro’s value. | |
| FR Trade Balance | Low | if actual > forecast, bullish for EUR | Exports minus imports. France is the second largest economy in Europe and if it has trade surplus, this can be good for the Euro. |
Employment
| Report | Impact | Big Picture | Currency Effect | Description |
|---|---|---|---|---|
| EU Unemploy ment | High |  | if actual > forecast, bearish for EUR | The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. The data tends to have a muted impact as there are several earlier indicators related to labor conditions in the euro zone. |
| GE Employ ment Change | High | if actual > forecast, bullish for EUR | Employment Change measures the change in the number of people employed. Job creation is an important indicator of consumer spending. | |
| GE Unemploy ment | Medium |  | if actual > forecast, bearish for EUR | The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. The data tends to have a muted impact as there are several earlier indicators related to labor conditions in the euro zone. |
French Unemploy ment | Low | if actual > forecast, bearish for EUR | The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. The data tends to have a muted impact as there are several earlier indicators related to labor conditions in the euro zone. |
Economic Activity
| Report | Impact | Big Picture | Currency Effect | Description |
|---|---|---|---|---|
| EU GDP (Y/Y) | High |  | if actual > forecast, bullish for EUR | Measures the total value of goods and services produced by Euro-zone nations. Robust growth signals more economic activity, which is good for currency; moreover, economic expansion raises concerns about inflation and central bank tendency to increase interest rates to curb it (and increased interest rate is also good for currency). |
| GE Factory Orders (M/M) | Low | if actual > forecast, bullish for EUR | Measures the change of new domestic factory purchases. If there are significant orders from outside the euro zone, this can result in upward pressure on the euro. | |
| GE Industrial Production (M/M) | Low |  | if actual > forecast, bullish for EUR | Measures the volume change in output from German manufacturing, mining, energy and construction sectors, and is a short-term measure of strength in the German industrial activity. |
FR Industrial Production (M/M) | Low | if actual > forecast, bullish for EUR | Measures the volume change in output from French manufacturing, mining, energy, and construction sectors, and is a short term measure of strength in the French industrial activity. | |
| EU Retail Trade (Sales) | Low | if actual > forecast, bullish for EUR | ||
| GE House Price Index (M/M) | Low | if actual > forecast, bullish for EUR | The House Price Index (HPI) measures the change in the selling price of homes. It is a leading indicator of health in the housing sector. | |
| FR House Price Index (Q/Q) | Low | if actual > forecast, bullish for EUR | The House Price Index (HPI) measures the change in the selling price of homes. It is a leading indicator of health in the housing sector. | |
| Spanish House Price Index (Y/Y) | Low | if actual > forecast, bearish for EUR | The House Price Index (HPI) measures the change in the selling price of homes. It is a leading indicator of health in the housing sector. |
Confidence and Sentiment Reports
| Report | Impact | Big Picture | Currency Effect | Description |
|---|---|---|---|---|
| GE ZEW Survey | High | if actual > forecast, bullish for EUR | Measures the sentiment of 350 German institutional investors and analysts and reflects the net result of their view of the medium-term forecast and current situation of Germany and whole Euro-zone. Headline number is the difference between those experts that are optimistic and those that are pessimistic, with higher numbers indicating a stronger economy. | |
| OECD Euro-zone Leading Indicator | if actual > forecast, bullish for EUR | |||
| EU Consumer Confidence (M/M) | High |  | if actual > forecast, bullish for EUR | Measures consumer confidence in economic performance, with rising confidence acting as a precursor to consumer expenditures which drive economic expansion. The headline is expressed as a percentage change from the previous period. |
| EU Industrial Confidence | Medium | if actual > forecast, bullish for EUR | Measure of the prevailing sentiment among industrial executives, with increasing confidence acting as a precursor to business spending and investment that leads to higher output and GDP growth. The headline is expressed as the difference between positive and negative responses, with higher numbers indicating a stronger economy. | |
| EU Economic Confidence | Low | if actual > forecast, bullish for EUR | Measures the overall sentiment toward the economy, with rising number reflecting bullish attitude toward the economy. | |
| EU Services Confidence | Low | if actual > forecast, bullish for EUR | Measures the overall sentiment in the service sector, with service sector accounting for two thirds of total Euro-zone GDP. Rising number suggests future upward trends for production and employment. | |
| GE Consumer Confidence | Low | if actual > forecast, bullish for EUR | Measures consumer confidence in economic performance, with rising confidence acting as a precursor to consumer expenditures which drive economic expansion. The headline is expressed as a percentage change from the previous period. | |
| FR Business Confidence | Low | if actual > forecast, bullish for EUR | Measure of the prevailing sentiment among French business leaders, with increasing confidence acting as a precursor to business investment that leads to higher output. The headline is expressed as the difference between positive and negative responses. |
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