Economic and Social Indicators that affect a Forex Broker’s review

There is a number of both economic and social factors that affect a forex broker’s review. Included in a review is mostly the performance of brokerage firms discussed at length by different forums world-wide. The global turn-over in exchange of foreign currencies is what in finality distinguishes the best forex firms from the not so good ones. It additionally tells us about the state-of-affairs of a particular economy or a group of economies where businesses and commercial establishments form the hub of world trade.

Factors that have a major impact on FX market are as follows:

Government policy changes

When a poll of elections is finalised, the economic situation of the nation (any country for that matter) is in a very volatile state. The previous Government is required to hand over the papers to the newly formed Government. During the interim period political unrest prevails across the nation. This has a tough impact on the rising and falling of currencies. Either the currency rises sky high or dips very sharply.

The Government also keeps rolling new policies and updates on financial matters from time to time fact that also pretty much affects the smooth functioning of FX markets.

Economic factors

When the economy of the nation is optimistic about its current state of affairs then there is a boom all over. This in turn leads to a positive impact on the dynamic currency market.

On the other hand, when the economy of the nation is facing an extreme downswing, negative impact is felt in trade markets as well.  Rising figures in terms of unemployment, political block outs or strikes by industrial associates and rising inflation cause the economy to swing in the negative direction. Of course, FX markets are no exception to this. At a point of time when the worldwide economy is facing an extreme recession, one has to exercise complete caution on trading with currencies.

Notes: Recession refers to complete economic un-rest or in-active state of affairs pertaining to the economic activities.

Retail sales index

The economic surge of activities is tested by the particular method. An average is taken from the sales turn-over reports of multiple products and services churned out by economies. A cluster of retail and service establishments participate in the survey and figure is finally arrived at. If an increased value of sales turn-over is achieved compared to the results of previous quarter it is estimated that the economy is experiencing a big time boom. Else it is facing a sluggish phase. This determines the rise and fall of currencies.

Consumer price index

Another yet economic as well as social indicator to gauge where the economy is heading towards. Consumer Price Index known as CPI denotes changes/amendments made to prices of goods and services in around 200 categories. This report can tell whether a company is making profits on goods and services or not. This also counts for whether the economy has a robust and exponential export growth leading to increased earnings of foreign currencies from different nations.

We have covered some of the socio-economic factors that can help you determine whether currencies are going up or dipping down. Further, this indicators are useful for Forex forecasters who are in this way able to predict market behavior.