First of five important fundamental factors we will deal with is Employment. Employment figures are important for Forex traders because employment directly affects consumer spending and consumer spending affects inflation, which plays key role into central bank decisions on interest rates. For example, if the Australian employment grew more than expected, this means that consumers will spend more, which will spur inflation and this will cause uptrend in Australian dollar. Each central bank has its targeted inflation, and if inflation moves far away from this target central banks must introduce monetary measures which would support consumer spending. Also, what is important with employment figures are also wage prices that must grow in line with forecasts. If wage prices are in decline this would prevent consumers from spending more, so even if employment grew negative trend in wage prices can overall cause decline in currency prices.
In the next chapter we will say more about importance of figures which indicate rate of economic growth.