Euro Indicators to Watch

When studying the movements in the value of the Euro you should analyze several indicators. When doing the analysis, you should have in mind that the EMU consists of 12 countries and any change in the economic and political conditions in these countries can result in a change in the EUR value. Germany, France and Italy represent the largest states within the EMU. Thus, their economic and political conditions should be closely watched because a change in them may result in a significant movement in the Euro.

The indicators you should pay special attention to are:

Money Supply (M3)

This measurement includes money supply tools ranging from notes and coins to the deposits placed in banks. M3 is regarded as a key gauge for inflation levels by the ECB.

In order to avoid any distortions of the information extracted from the aggregate, the growth rate is examined every 3 months by using the moving average. Since the ECB's approach toward setting targets is quite flexible, significant room for interpretations and maneuvering is left. A reference value is set. If the numbers diverge from this value the EBC doesn't impose any bands on the growth of the M3.

Preliminary GDP

The Eurostat issues a preliminary GDP measure. This is done when enough data is collected from member states. Italy is not part of the preliminary GDP value and its number is added to the final one. The yearly number for EMU-11 and EU-27 is easily calculated since it represents the sum of national GDP. However, the quarterly estimate is more difficult to get since not all of the countries report such.

Individual Member State Budget Deficit

Member states should meet a target level of budget deficit. The forex market participants closely view the ability of the countries to meet these limits.

Harmonized Index of Consumer Prices (HICP)

The EU law requires that international comparison is made. The tool used for this purpose is the HICP, which is published by the Eurostat. The MUICP has been introduced to measure the index for the EMU-11 area. In order to calculate the value of this index data on the prices is received from each of the states' statistical agencies. The HICP consists of 100 sub-indexes are used in the calculations as weighted averages.

German Economic Indicators

• Unemployment

  The Labor Office issues a report on the number of unemployed and the changes that have occurred during the past month. The data comes both in a seasonally adjusted and non-seasonally adjusted form. Information on the vacancies, the unemployment rate and the short-shifted working arrangements is issued by the National Statistical Institute.

  Shortly after the FLO is released, the seasonally adjusted unemployment rate is provided by the Bundesbank. However, an approximation of the data to be released is known a day before the actual release due to a leak made by a trade-union source. The official figures are usually reflected when the actual figure is reported by the Reuters as given by "Source". Before the actual release is done, many rumors go around which carry significantly incorrect information. Thus, you should approach such unofficial announcements with great caution.

• Industrial Production

  The seasonally adjusted data from the following categories is provided:

  • Manufacturing - this aggregate includes four groups of products
    • basic and producer goods
    • consumer durables
    • consumer non-durables
    • capital goods
  • Energy
  • Mining
  • Construction

  The forex market is generally interested in the seasonally adjusted monthly numbers. In order to avoid overemphasizing aberrations for one month, the Finance Ministry tends to stress on comparison over two months. When the full sample is available the release is reexamined, since it is initially based on a smaller sample.

• IFO Survey

  Since Germany represents the largest economy in Europe, it is used as a measure toward which the overall economic conditions in Europe are evaluated. Thus, the IFO institute makes a survey of 7,000 German firms, which are asked to make an evaluation of their short-term business plans and the overall business climate in the country. The results of the survey include information on the current business conditions and the expectations on the future business development. The usefulness of the measure is increased when it is compared to past data.

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