The Employment Cost Index (ECI) is used to measure the changes in the expenses with regard to the labor in the economy. It is done quarterly by certain agencies in the government. It aids in the measure of inflation with regards to the wages, salaries, and benefits that the employers pay to their employees.
Although the ECI talks about cost index, it is closely monitored by the finance sector, it still get less attention from the media and the press, than the Consumer Price Index (CPI). It even gives sign whether the employment cost is rising or falling.
ECI then makes sure that there is the accurate data regarding the employers’ compensation cost that depends for the making of policies and the success of the business planning. When ECI is on its decision making process, it also affects the main interest rate.
The result of the ECI is based on the surveys conducted related to the employers’ payroll every month of the quarter. It even traces the movement of the labor cost, the wages, benefits and bonuses for the employees of all company levels.
Why analyze the ECI? It is because wage pressure increases together with inflation for the reason that compensation tends to increase even before the companies increase the price for the consumers. It simply implies that an increase in the wage of the employees also increases the price of the goods or services, since labor that comes from the employees is a component in order to make the commodity and services.
There is no wonder, why there are companies that cannot easily increase the compensations, salary or wages of the employees. It’s because it will directly affect the price of the goods and services they offer.
It is said that ECI is the best way to measure the compensation growth of wages and benefits. It mainly lies on the capacity of the ECI to show whether the wage or benefit cost excess or grows faster than inflation.
On the other hand, ECI is a less timely indicator of employment cost than those with the hourly information found in the monthly reports of employment. This hourly reports are made available on the first week of the next month while ECI data will be available a month after the quarter ends.
Yet, the ECI has two advantages over the hourly earnings series. Benefits included are, the non-wage element of employment costs. Benefits covered by the ECI include paid leave, insurance benefits, and retirement and saving benefits. Another one, it is free from employment shifts among occupations and industries since like the consumer price index (CPI), the ECI relies on a fixed service like occupations.
Since the ECI includes overtime payments as a fixed increment to wages, short-term increases in overtime will not change the index.
What is an ECI or an Employment Cost Index?
Forex Trading Moving Averages
Forex Trading Moving Averages is a technical analysis indicator that lets you see the average value of a currency over a period of time. In order to calculate moving averages for the past 20 days you add the last 20 currency prices and divide the addition by 20. Because days continue to advance, the sum you'll get through Forex trading will change on a daily basis, and this is why it is called moving averages.
The most commonly used Forex trading moving averages timeframes are 20, 30, 50, 100 and 200 days. Each timeframe can give you a different view and perspective on the future of the currency, and this is why all of these figures are used periodically. Using these different timeframes you can increase your profits and also protect you lots from unnecessary losses, so use it wisely, and frequently.
If the Forex trading timeframe is shorter, price changes will affect it more. If the timeframe is longer, the moving average will be smoother and less sporadic. Moving averages are used in order to recognize a certain trend the Forex trading currency is following, and also to view a clearer and straighter graph, without any added "noise".
Forex trading moving averages are the most popular indicator to be used for various Forex trading strategies and technical analysis. Tania Raven, Market Analyst
Forex Trading Support and Resistance Levels
In this Forex trading guide we will try to describe in detail exactly what support and resistance means in the following Forex trading lesson. Support and resistance levels are important indicators that can be used to set stop loss and take profit orders using technical analysis.
Support levels are the places where the price of the currency is expected to rise. This happens when there is enough demand for the currency in order to stop the downtrend and therefore causes it to go up.
In order to recognize support levels in Forex trading, take a look at the Forex chart, and try to find a few lows that fluctuate in a horizontal line. This line will be set as the session's support level.
If a support level is penetrated, and the currency drops below it, then it becomes a resistance level. This is caused when the currency reaches the support level again most traders will sell their currency and cause it to go down again.
Forex trading Resistance levels are also horizontal lines that appear on the upper side of the chart. Resistance levels are used to set the upper level of Forex trading, when supply levels surpass demand for the currency. After a resistance level is broken there is usually a change in the bid/ask price of the currency, and sometimes leaps upwards.
Hopefully, this Forex trading guide will help you make the right decisions in investments, and help you understand this concept of suport and resistance.
Forex Trading Trends - Uptrends, Downtrends and Sideway Trends
Forex trading trends are used in technical analysis, in order to view the general direction of the currency. Trends are identified as uptrends, downtrends and sideway trends. Without the use of trends Forex analysts wouldn't have the ability to predict the direction of the currency price at any given time.
Forex Trading Uptrends
An uptrend is a Forex trading trend that occurs when the general direction of the Forex trading currency you are trading is upward.
Forex uptrends are used by traders to make profits while the trend lasts and until it reverses. The goal of most technical traders is to identify a strong uptrend and to profit from it until it reverses, and with this Forex trading trend strategy, you are able to cut down on unnecessary losses. The best way to use uptrends is to sell the currency once the new peak become lower than the previous peek.
Forex Trading Downtrends
A Forex downtrend occurs when the general direction of the Forex currency you are trading is downward.
To use downtrend is similar to uptrend use, you simply monitor the currency chart and notice when one peek becomes higher than the previous peek, indicating a reverse in the Forex trading trend direction. Downtrends are also useful tools to determine potential trading losses
Forex Trading Sideway Trends
There isn't much to say about sideway trends, except that they are trend stages in between uptrends and downtrends. Sideway trends usually do not tell much about the currency situation, even though they can hint on a nearing reversal in the trend direction. These are Forex trading trends that are less frequent but still give important information for the online trader.
Now that you've learned all there is to know about Forex trading trends, go on and see how you can use it in the actual Forex trading market.
Introduction to Technical Analysis
Any forex trader must apply a certain method in order to predict the future price of a certain currency, that's a given fact. The entire concept of speculative forex trading is based upon future fluctuations in currency prices. You make profit by buying a certain currency in one price and selling by another.
Therefore, the most important thing for any trader, novice or expert, is to have some sort of prediction to future price changes. Thus came to life several different methods of market analysis, each tries to incorporate different methods and data in order to give some sort of prediction to the future price of various currencies.
The first method we will review in this series of articles is Technical Analysis. Technical analysis is based on the concept that it is possible to predict future prices using only market generated data. All the data and history regarding a price is represented in various charts and imply assorted methodologies. Every trader, no matter what trading style he uses, uses this method at some point. At the very least, these charts help to determine what the ideal buy or sell position is, at any given time. It helps to give a broader look on he trends and patterns in the market.
Many critics accuse the Technicians of ignoring the fundamentals of the market, but they claim in return that all of the market's fundamentals are already represented in the charts. In their opinion any fundamental market rule is already enveloped in the current price and more importantly in the price's history.
Forex trading can be easy using the right reading materials and tools. Follow our latest articles and download our software here at Forex Floor.
Consumer Spending Forex Trading Indicators
This Forex trading economic indicator is published by the Bureau of labor statistics in the U.S. Department of Labor, every 13th of a month. The economic index is relevant for the passing month, and measures the price of a fixed basket of goods and services that is bought by consumers. This is the most used measure of inflation, an important tool for the Forex trading market.
It is important to state that this Forex economic indicator does not measure technological commodities which change in price, and this is something the CPI has been criticized for.
When you use the CPI to measure Forex trading price changes, you should always remember to take into consideration the movements in the food and energy prices, because they can change and rise or drop regardless of the Forex currency or the inflation levels.
The CPI is also monitored on it's yearly Forex Trading indicator that tells a great deal on the condition of the Forex inflation levels of a currency.
Consumer Credit Forex Indicator
The consumer credit index is published by the federal reserve every fifth business day of the month. This Forex trading measure is used to evaluate consumer spending. This measure is liable to make considerable changes and fluctuations in its value.
Consumer credit consists of three categories: auto, revolving and other. All in all this indicator is less important than the CPI, but it can also help you gain an understanding of the online Forex trading market. Tania Raven, Market Analyst
Forex Employment Indicators
In this page we cover the most important employment indicators for the online Forex market, including the ECI, the household survey and the establishment survey. Employment indicators are important economic indicators, and are used often for fundamental analysis of the online Forex trading market.
The Employment Cost Index (ECI)
The ECI is an important Forex employment indicator, and is published in a quarterly report from the U.S. Department of Labor. It measures the growth of employees' compensation, and this includes the wages and benefits that employees get.
The information in the survey is based on a report that is held at the end of the month every quarter. The information that is tracked by the ECI is the wages movements, the fringe benefits and the bonuses that are given to employees at various levels of the organizations.
The report is used to foresee the online Forex trading currencies price movements. As employees increase the pressure for wage raises, this raises inflation levels, as consumer prices move up in their prices. The inflation is assumed to go up if the ECI increases. This in turn lowers the online Forex currency price.
The ECI is a Forex employment indicator that measures the number of jobs in more than 500 industries that cover 50 states and 255 metropolitan areas.
The Employment Report
This report contains two employment reports inside: the household survey and the establishment survey.
The household survey is an employment indicator concerned with households, and is smaller, covering only 50,000 households.
the establishment is about businesses, is more comprehensive and thus it is preferred by analysts of the online Forex market. It covers 400,000 businesses with 47 million people.
The Establishment Survey
Non-farm Payrolls - This is a very important employment indicator for the establishment report, and has crucial importance for online Forex trading. it measures how many people are there on payrolls for non-agricultural businesses.
Average Workweek - This measures the average hours worked non-farm payroll employees, and is a fine judge of the overall strength of the employment report.
Aggregate Hours Worked - This index combines the two previous indexes together.
Average Hourly Earnings - This employment indicator gives us a good idea of the personal income growth during the month, and is especially critical in times of strong economic growth, as an evidence of increasing wage pressures, which can influence the online Forex trading market considerably.
The Household Survey
The Unemployment Rate - This index is calculated through the division of the number of people unemployed by the number of people in the labor force.
There are other employment indicators in the employment report but these are the relevant ones for the online Forex trading market.
Jim Barns, Market Analyst
