Are there differences in formulas or the methodology between the same macroeconomic indicators issued by different countries or regions, such as the US and the euro zone?
This question may be important for traders who perform very detailed analyses. Indeed there are, most of the time, differences between the same indicators, either in respect to the precise formula applied, or in cases such as the CPI, the content of the basket of goods used. On the other hand, in the case of every country or region, there is always one official source that is responsible for publication of the given data release, and one official set of data. As the methodology used, in the case of most of the countries, has to meet certain international quality standards, standard reports such as GDP or the CPI can be compared between the different countries or regions.
Are there macroeconomic indicators that are unique for a given specific country?
Macroeconomic indicators are constructed according to the country’s specifics. Therefore, there will be indicators that regard only that country. Examples for this may be the US Michigan report, or the IFO report from Germany. You can find more indicators in our section related to macroeconomic data for the US or for the euro zone.
Do only measurable macroeconomic indicators affect market prices?
No, there are other very important indicators affecting market prices. These can be confidence or sentiment opinions, which economists sometimes try to present in a measurable way. Also experts opinions may have significant influence on prices. You can see what factors influence prices in our general market mechanics, our section related to macroeconomic data for the US or for the euro zone.
How do changes in the prices of commodities affect currency prices?
For commodity investors, currencies are just instruments for performing transactions. Therefore, a rise or fall in interest for commodities will result in a rise or fall in the prices of currencies in which commodities are traded. For example, oil is traded in USD, so an increase in demand for oil will lead to the appreciation of the USD.
There is so much information published. What data should I focus on?
This is a dilemma that many investors have, and at the same time it is very difficult to give a precise answer. Basically, one should follow the most influential information for a specific asset, but also taking in account market activity. This is because when the markets are very volatile, only the most “important” macroeconomic information provides significant changes in prices, but when the markets are rather stable usually less important news will result in significant price movements. Our selection of information is available in the general market mechanics section;
What is the difference between the US unemployment data and initial claims (jobless claims)?
Initial claims or jobless claims is just a fragment of the employment report. While unemployment data covers the entire employment situation in the US, the jobless claims is a weekly report showing only data related to insured unemployed individuals who file claims (known as “initial claims”) when losing their jobs. Detailed information on both reports may be found in our markets overview - macroeconomic data section.
Which one is more important, fundamental or technical analysis?
An investor should not treat both types of analysis as one replacing another, but rather as complementary ones. Usually fundamental theories are used for long-term investments, and technical analysis for short-term investments;
Why does the condition of a country outside of euro zone sometimes affect euro prices?
Trade relations do not focus mainly on countries which are only within the euro zone, but also with countries outside - not even those planning to enter the euro zone, like for example Russia, United Kingdom, or even the US. This applies not only to the euro zone but also to other countries like the United States. The close trading links between the US and Latin American cause the US dollar to react to the most important information concerning countries from that region. More information is available in the general markets mechanics section of our website or in the macroeconomic data section.
Why, during a speech of a top political official, do the prices of assets such as currencies sometimes shift very quickly?
There are many factors affecting the price of assets, not only those based on fundamental theories, but also others affecting investors perspective of the market. They also include events such as speeches of top political officials. More detailed information is available in our general market mechanics.
With so much volatility on the financial markets, is the fundamental analysis useful?
The fundamental analysis provides the perspectives on the development of themarket situation in the longer term. Typically, for short-term trading, investors usually use technical analyses. However, one should never forget the fundamental foundations which are used, even in the short-term when news is published.