A country’s economic indicators can tell us a lot about how that country’s finances are doing domestically. This in turn can hint at information on the global scale, and thus affect currency prices. Think about it this way: if a nation’s stock market is going strong, investors from all over the world will want to pocket some of the profit. If we were talking about the New York Stock Exchange, this would mean that international investors would be required to convert their base currency to the U.S. dollar in order to invest in U.S. stocks. As a consequence, this would increase demand for the dollar, increasing its price on the international market. Other currencies would go down in value respectively as the dollar increased in price, making the dollar a solid investment.

How do you read economic indicators? For one, there are hundreds of variables that you can look at, so you need to know where to begin. Gross domestic product is a good place to start. This shows how much money was spent within a given nation’s borders. The more money spent, the more robust the economy. Another key indicator is a nation’s jobless or unemployment claims. If a nation has a high unemployment rate, say 15 percent, you can rest assured that that nation has a struggling economy and that they are losing jobs to overseas companies. The higher the jobless claims rate, the worse the currency will perform based on the Trader Swiper.

Finally, we want to look at the trade balance. Are more dollars entering or exiting the country? A good economy will have more dollars going into it than out of it.

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