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

ReportImpactBig PictureCurrency EffectDescription
EU Economic Indicators ECB
Rate Announce
HighEU Economic Indicatorsif 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
EU Economic Indicators ECB President
Speaks
  if actual > forecast, bullish for EURAs 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

ReportImpactBig PictureCurrency EffectDescription
EU FLAG EU Consumer Price
Index (CPI) and Core
HighEU Economic Indicatorsif 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 FLAG EU
CPI Core
  if actual > forecast, bullish for EURMeasures the change in the prices of a basket of goods and services, excluding food and energy.
EU FLAG  EU Producer Price Index (PPI)High if actual > forecast, bullish for EURMeasures the change in the price of goods sold by manufacturers.
EU FLAG EU Labor CostsMedium if actual > forecast, bullish for EURMeasures the change in the price businesses pay for labor, excluding overtime, and a leading indicator of inflation.
EU Economic Indicators EU M3Low  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 & CoreLow if actual > forecast, bullish for EURMeasures the change in the prices of goods and services purchased by consumers.
EU Economic Indicators FR CPILow if actual > forecast, bullish for EURMeasures the change in the prices of goods and services purchased by consumers.

Balance of Payments

ReportImpactBig PictureCurrency EffectDescription
EU Economic Indicators EU
Trade Balance
MediumEU Economic Indicatorsif 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 Economic Indicators EU
Current Account
MediumEU Economic Indicatorsif actual > forecast, bullish for EURMeasures 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.
EU Economic Indicators GE
Trade Balance
MediumEU Economic IndicatorsExports 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. 
EU Economic Indicators FR
Trade Balance
Low if actual > forecast, bullish for EURExports minus imports. France is the second largest economy in Europe and if it has trade surplus, this can be good for the Euro.

Employment

ReportImpactBig PictureCurrency EffectDescription
EU Economic Indicators EU Unemploy
ment
HighEU Economic Indicatorsif 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.
EU Economic Indicators GE
Employ
ment
Change
High if actual > forecast, bullish for EUREmployment Change measures the change in the number of people employed. Job creation is an important indicator of consumer spending.
EU Economic Indicators GE
Unemploy
ment
MediumEU Economic Indicatorsif actual > forecast, bearish for EURThe 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.
EU Economic Indicators
French Unemploy
ment
Low if actual > forecast, bearish for EURThe 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

ReportImpactBig PictureCurrency EffectDescription
Eu Flag EU
GDP (Y/Y)
HighEU Economic Indicatorsif 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).
EU Economic Indicators GE Factory Orders
(M/M)
Low if actual > forecast, bullish for EURMeasures 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.
EU Economic Indicators GE Industrial
Production
(M/M)
LowEU Economic Indicatorsif actual > forecast, bullish for EURMeasures 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.
French flag
FR
Industrial
Production
(M/M)
Low if actual > forecast, bullish for EURMeasures 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 Flag EU
Retail Trade (Sales)
Low if actual > forecast, bullish for EUR 
EU Economic Indicators 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.
french flag FR House Price Index
(Q/Q)
Low if actual > forecast, bullish for EURThe 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 EURThe 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

ReportImpactBig PictureCurrency EffectDescription
EU Economic Indicators 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 FLAG EU Consumer Confidence
(M/M)
HighEU Economic Indicatorsif actual > forecast, bullish for EURMeasures 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 Economic Indicators EU Industrial
Confidence
Medium if actual > forecast, bullish for EURMeasure 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 Flag EU Economic
Confidence
Low if actual > forecast, bullish for EURMeasures the overall sentiment toward the economy, with rising number reflecting bullish attitude toward the economy.
EU FLAG EU Services
Confidence
Low if actual > forecast, bullish for EURMeasures 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.
EU Economic Indicators GE
Consumer Confidence
Low if actual > forecast, bullish for EURMeasures 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 Economic Indicators FR
Business
Confidence
Low if actual > forecast, bullish for EURMeasure 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.