Lesson 13: The Big Movers - Key Economic Indicators

Part of Module 4: Fundamental Analysis - The "Why" Behind the Moves

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Introduction: The Market's Scheduled Earthquakes

While a country's economy is always changing, there are specific, scheduled moments when official "report cards" are released. These are known as economic indicators. A few of these reports are so important that they can cause massive, instant price swings across the market.

We will focus on the "big three" categories of economic news that you must be aware of.

1. Inflation Data (The Cost of Living)

• The Report to Watch: Consumer Price Index (CPI)
• What it is: CPI measures the average change in prices that consumers pay for common goods and services. It's the most widely used measure of inflation.
• Why it Matters: If CPI is too high, the central bank will likely raise interest rates to cool down the economy. Higher interest rates make a currency stronger.
• The Bottom Line: A higher-than-expected CPI report is generally bullish (good) for that country's currency.

2. Employment Data (The Health of the Workforce)

• The Report to Watch: Non-Farm Payrolls (NFP) - from the USA.
• What it is: Released on the first Friday of every month, this report shows how many new jobs were created in the US. It's a critical snapshot of the health of the world's largest economy.
• Why it Matters: More people having jobs means more people are earning and spending money, which signals a strong, growing economy.
• The Bottom Line: A higher-than-expected NFP number is generally bullish (good) for the U.S. Dollar.

3. Economic Growth Data (The Size of the Economy)

• The Report to Watch: Gross Domestic Product (GDP)
• What it is: GDP is the total value of all goods and services produced by a country. It is the ultimate report card on a country's economic health.
• Why it Matters: A strong GDP report shows the economy is expanding. This attracts foreign investment and signals that the economy can handle higher interest rates.
• The Bottom Line: A higher-than-expected GDP report is generally bullish (good) for that country's currency.

Conclusion: Awareness, Not Gambling

Trading during these high-impact news events is extremely volatile and risky, and it's often best for new traders to stay out of the market right when the news is released. The primary goal of this lesson is to make you aware of these events so you are never surprised by a sudden, massive move in the market.