Fundamental analysis or market analysis based on economic indicators, many of the strategies of the Forex market. Most platforms Forex trading online provides data on economic indicators using their forex magazine online, often free of charge. One of the most important indicators of the economy the economic cost index (ECI), a major player in shaping and defining strategies Forex market.
What is the employment index (ECI) to measure?
The cost index measures use mainly the cost of doing business. It measures monthly changes in key variables such as employee salaries, retirement benefits and bonuses of jobs. ECI is so important that it even allows to define the monetary decisions and policies of the Federal Reserve.
The road is inflation
By comparing the rate of inflation to changes in the monthly salaries of employees is crucial in access or not wages are in place with current prices. For example, if the current inflation rate is 3% per year, and wages are rising at an annual rate of 2%, even when wages are rising in general, are in fact below the actual cost of living. This could adversely affect the economy (ie, less consumer spending) and in the long run, affect the rate of change of a country. On the other hand, if wages rise at a rate of 3% per year with a healthy increase in employment benefits and work-related premiums (total compensation), and inflation is only 2% per year, while the benefit of the global economy, the exchange rate in the nation.
It can be a lagging indicator, but it is always important!
Although ICE is a lagging indicator (after following economic changes), it is always an important factor in the basic strategies in the market. The ICE (either up or down), basically validates a particular economic environment and can help investors build a global trade strategy. Let's say the economy is showing signs of weakness in recent months, but not all the conflicting reports. The report confirms the fate of ECI and the economic performance of a weakening economy (ie, lower wages), which in turn can negatively affect a country's rate changes. With this information, the investor can make strategic decisions to invest in the Forex market.
