Dollar Value and FX Traders

The US dollar has been the world’

s reserve currency since the Bretton Woods agreement reached after World War Two. Most governments maintain currency reserves in US dollars. There are many factors that determine the exchange rate of the dollar and Forex traders are constantly monitoring information from a variety of government and private sources.

The Federal Reserve

Forex traders and economists watch information released by the Federal Reserve which sets interbank lending rates and controls the supply of US dollars worldwide. There are several less well known economic indicators that help to determine the value of the dollar.

The ADP Nonfarm Employment Change

The ADP (Automatic Data Processing, Inc.) Nonfarm Employment Change is a measurement of the number of new jobs created in the previous month. The ADP Nonfarm Employment Change report began in March of 2006 and offers insights into the government’

s Non Farm Payroll Report. The report measures job gains or losses and is an important economic indicator and is watched closely by Forex traders.

The Average Hourly Earnings Report

The Average Hourly Earnings Report gathers numbers relevant to wage inflation, specifically price increases in wages paid to nonfarm employees. Higher figures seen in this report are seen to have a positive impact on a nation’

s currency because wage inflation leads to consumer inflation and consumer inflation are believed to indicate a strong economy.

Consumer Confidence

Consumer confidence is an important economic indicator. There are several private firms that monitor consumer confidence in the US. Consumer optimism will have a positive effect on the value of the dollar and forex traders and investors consider this as one of the leading indicators of the performance of the US economy.

Core Durable Goods Orders

The Core Durable Goods Orders report measures the change in the total value of new purchase orders placed with manufacturers for durable goods. The report is a leading indicator of production - rising purchase orders signal that manufacturers will be busy in the months to come as they work to fill the orders. The report is carefully watched by forex traders worldwide.

Existing Home Sales Report

The Existing Home Sales Report is another carefully watched report by Forex traders especially since the subprime mortgage meltdown. Each month the National Association of Realtors releases a report measuring the number of homes sold in the prior month. Existing Home Sales and New Home Sales have collectively gained more respect from Forex traders since the beginning of 2007 when the subprime market began to come under scrutiny.

Gross Domestic Product

Gross Domestic Product is considered by most the broadest, most comprehensive barometer of a country’

s overall economic condition and Forex traders monitor the GDP of most major economies. The GDP measures the sum total of all market values on final goods and services produced in a country. GDP is calculated on a quarterly basis and is easily one of the most important indicators watched by Forex traders.

There are many more reports, some well known, some relatively obscure, but savvy Forex traders and investors monitor all these reports closely. It is no wonder that it is said that a Forex trader never sleeps!