In this article we will look at the major economic indicators that influence the price movements of the Euro. When studying the Euro for trading purposes there are several important indicators to analyze. Most important to keep in mind is that, unlike USA and Japan, the Euro zone consists of 12 different countries and any individual change in one of their economies may have an effect on the Euro. Political differences and developments in each of the countries may have strong effects on the currency as well. The largest states within the EMU are Germany, Italy and France, so their economic and political movements become the most important to keep up with.
The most important indicators you need to pay attention to are:
Money Supply (M3)
This key figure measures the total of the European money supply, including notes, coins and all deposits in banks and electronic values. M3 is seen as the number one measurement for inflation within the union. The growth rate is examined every three months by using a moving average to avoid distortions in the data. The European Central Bank (ECB) is know to be very flexible so there is always room for interpretation on the data.
This figure comes from the Eurostat and is a preliminary GDP measurement. When enough data is collected from enough member states, the report is released. Italy has never been and is not currently a part of the Preliminary GDP. It is easy to calculate the yearly values for both EU-27 and EMU-11 since they are the sum of national GDP’s.
Individual Member State Budget Deficit
Member states have signed to strive to not exceed a certain budget deficit level. The participants of the forex market follow their ability to stay within limits closely.
Harmonized Index Of Consumer Prices (HCIP)
Another inflation index. The European Union requires by law that price comparisons are made by Eurostat.
These are some of the common indicators for the Euro zone as a whole. Germany is the largest economy among Euro countries, and their economy has a huge impact on the Euro.
Let’s take a look then at some Key German Indicators.
The Department of Labor issues a monthly report on changes in unemployment numbers. The data is seasonally adjusted as to correct for season specific work.
The other measure of unemployment is released by the Bundesbank, where there is always an approximation made public the day before the actual release.
This index includes data on many different groups of products: Basic Goods, Producer Goods, Consumer Durables, Capital Goods, Energy and Mining.
Germany is the largest economy in Europe and is therefore used as a measurement on which the overall state on the European economy is predicted. The IFO institute make surveys of 7,000 German companies which are asked to evaluate their short term businesses schedule and how they perceive the economy at the present. The impact of this data is increased when compared to historic data.