Certain financial indicators have a history of moving the
financial markets when the actual numbers don't match
consensus. This article explain what some of the better
financial indicators are and the ones traders should pay
close attention to when trading the forex market.
APICS Survey - The APICS survey provides detailed
information of the manufacturing sector. This survey is
less well known than the ISM, but can also suggest trends
in production. The diffusion index does not move in tandem
with the ISM index each month, but sometimes the two do
move in the same direction. Since manufacturing is a major
sector of economy, investors can get a feel for the general
economic backdrop for several investments. These surveys
also play an important role in learning forex trading.
Business Inventories - The degree of inventories in
relation to sales is an important signal of the near-term
direction of production activity. Investors need to monitor
the economy closely because it usually dictates how various
types of investments will perform. Growing inventories can
be an indication of business optimism that sales will be
growing in the coming months. By looking at the proportion
of inventories to sales, investors can see whether
production demands will expand or contract in the near
future. The business inventory data provide a valuable
forward-looking tool for traversing the economy and it is
greatly used while making forex trading strategies.
Chain Stores Sales - It is monthly sales volumes from
department, chain, discount and apparel stores. Sales are
reported by the individual retailers. Chain store sales are
an indicator of retail sales and consumer spending results.
Consumer spending accounts for two-thirds of the economy,
so if you know what consumers are up to, you will have a
pretty good grip on where the economy is headed. Sales are
reported as a change from the same month a year ago. It is
significant to know how strong sales actually were a year
ago to make sense of this year's sales. In addition, sales
are normally reported for "comparable stores" in case of
company mergers.
Construction Spending - Data are available in nominal and
real (inflation-adjusted) dollars. Because of their forex
trading strategies, businesses only put money into
construction of new factories or offices when they are sure
that demand is strong enough to justify the expansion. The
same goes for individuals making the investment in a home.
That's why construction spending is a good indicator of the
economy's momentum.
Consumer Confidence - It is study of consumer attitudes
concerning both the present position as well as
expectations regarding economic conditions conducted by The
Conference Board. The level of consumer confidence is
directly related to the intensity of consumer spending.
Consumer spending accounts for two-thirds of the economy,
so the markets are always dying to know what consumers are
up to and how they might act in the near future. The more
confident consumers are about the economy and their own
personal finances, the more likely they are to spend. With
this in mind, it's easy to see how this index of consumer
attitudes gives insight to the way of the economy. Changes
in consumer confidence and retail sales don't move in
tandem month by month.
Consumer Price Index (CPI) - It is measure of the average
price level of a fixed basket of goods and services
purchased by consumers. Monthly changes in the CPI
represent the inflation rate. The CPI is the most followed
indicator of inflation in the United States, some forex
training institutes also keeps record of it for training
purpose. Inflation is a general increase in the cost of
goods and services. The relationship between inflation and
interest rates is the key to understanding how data like
the CPI influence the markets. By tracking the trends in
inflation, whether high or low, ascending or descending,
investors can anticipate how different types of investments
will perform.
Current account - It is a measure of the country's
international trade balance in goods, services and
unilateral transfers. The level of the current account, as
well as the trends in exports and imports, are followed as
indicators of trends in foreign trade. U.S. trade with
foreign countries hold significant clues to economic trends
here and abroad. According to forex training experts this
data can directly affect all the financial markets, and
particularly the foreign exchange value of the dollar.
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Andrew Daigle is the owner, creator and author of many
successful websites including ForexBoost at
http://www.ForexBoost.com and
http://www.squidoo.com/forexboost , Free Forex Training
Resource for the Novice and Advanced Forex trader.
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