Been tracking economic indicators for months now and wondering if anyone else factors unit labor cost into their currency trades.
Seems like most traders focus on the usual suspects but this one catches some interesting moves before they happen.
Unit labor cost won’t help you time entries, but it’s solid for picking direction. Don’t go long on currencies where labor costs are climbing faster than productivity. Look at the trend over 2-3 quarters - ignore single releases. When you see consistent increases, central banks usually step in within 6 months. Combine it with your technicals to figure out which side to trade for swings.
Unit labor cost changes can hint at currency moves months out, but I just use it for background context.
The data’s delayed and gets revised constantly, so timing entries directly off it is tough.
I look for big trends in the quarterly reports, then mix that with technical levels when I’m actually trading.
I used this indicator a lot when swing trading EUR pairs a few years back. Unit labor cost shows wage pressure building before it hits main inflation data.
Caught some solid EURUSD moves when German unit labor costs spiked in early 2022. Gave me 6 weeks heads up before the ECB turned hawkish.
You need patience though. Can’t daytrade this stuff. I’d check quarterly releases, spot big shifts, then wait for price to confirm direction with my regular setups.
Best when combined with productivity data. Rising labor costs with flat productivity usually means currency weakness ahead.
I check it sometimes but the data’s too slow for short-term trades. Works better for longer plays though.
I mostly stick to NFP and inflation numbers - they move faster.
Focus on price action not on unit labor cost.