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Less Influential Indicators

Current Account

Represents the account that holds all the transactions for imports and exports of goods and services for a country, and is called the Trade Balance. In terms of foreign exchange this means that if the United States exports a product to Europe the demand for US Dollar will increase as dollars need to be purchased to pay for the goods. If Japan imports a product from Germany the demand for euro will increase as euros need to be purchased to pay for the goods which will lead to an appreciation of the euro against the yen. If it is said that there is a surplus on the Trade Balance of US, it implies that US exported more than they imported.

Money Supply M2/M3

Reflects the amount if money within a countries’ economic system, and is recognized in terms of “M1, M2 and M3”. Included is currency and cash plus in the narrow measures of money (M1) is the amount of money in checking accounts. Broader measures add on money market funds, large savings accounts etc. any money held in a Bank or Federal reserve vault that is not in a customers name is not included in money supply, so when a currency is printed it will not be added to the money supply until such a time as it is needed. At any given time there is a calculable amount of money circulating the economy and this will be referred to as money supply.

Housing Starts

The Housing Starts Indicator measure the number of residential units on which construction started each month, and has a powerful effect through the economy and therefore across the markets. Changing in the rate at which construction begins or trends in housing starts indicates a lot about the demand for homes and the outlook on the industry of construction. 

Every time a new home is started the following happens:

1. Construction Employment rises.

2. Income from the latter will be pumped back into the economy.

Once the home is sold we see:

1. Revenues for the homebuilder.

2. A lot of consumption opportunities for the buyer, such as home appliances and furniture.

Buyers spend money and this has a ripple effect in the economy, especially if you think in terms of hundred thousand new households doing this every month.