There are a large number of fundamental indicators available to forex traders, but a small number have the power of shaking the markets by themselves alone. For instance, leading indicators rarely create much market response, but non farm payrolls releases have an impact that lasts beyond days to weeks and months. The below are examples of such important indicator groups.
Interest Rates: Any piece of information that has a direct relationship to central bank policy outlook is crucial to forex trading. Interest rates are set by central bank officials, and their commentary is often as important as interest rate decisions themselves.
Balance of Payments Statistics: These numbers provide the most comprehensive information on the forex flows into a country. Balance of Payments provides a complete snapshot of the current account, and the capital and financial account. By understanding the balance of payments statistics we can acquire a complete and accurate opinion on the direction and depth of currency movements inside a country’s borders.
Unemployment Data: The unemployment data is important mostly because of its relationship to interest rates. Most central banks tend to raise interest rates in a period leading to below long term average unemployment, and reduce them where there is a labor market slack (there are too many workers, and few businesses.)
GDP: the GDP data has the power to shake the markets and lead to major realignment of positions if it is a surprise, since it will force central bank authorities to revise policy alignment. At other times, GDP numbers that match consensus rarely have a lasting impact on the market.
Consumer Price Inflation: The CPI, and its various equivalents are eagerly anticipated by markets because their strong relationship with interest rate trends. High and rising CPI values eventually lead to rising interest rates, and vice versa.
Next step: Gross Domestic Product (GDP)