Forex Data
Forex market unlike other market is open twenty four hours in a day & five days in week. There will be always ample liquidity in the market, because more than three trillion dollar is the turnover per day. This market is been affected by lot of data, which are belonged to various economies. We are here going for a brief look on the data which can bring more than 100 pip move in a day.
Data differentiation
We can differentiate those data based on their affection to the market. Traders will wait for these data to take a position in the underlying pair. Say for example Euro/Dollar, FED has announced that they will watch the economy closely to take decision on interest rate hike. If at this point of time unemployment rate came lesser than consensus will make the dollar more strengthen against euro. Because if unemployment rate is low people will have more money through their earnings to spend and thus economy can maintain its pace of growth. If economys growth matches with FEDs expectation they will head for further rate hike in order to bring the price stability.
The important Forex data which market will wait and consider are mentioned and explained below:
1. Jobless claim: - this will depict the number of increase or decrease in the claim of unemployment rate which will help the market makers to judge whether economy will slow down or not and how the chain of data will come in future.
2. Beige Book: - this book shows the commentary about the current economic condition from Federal Reserve. This is published just before the FOMC meeting, so that members can read each economic corner to take a best judgment in the meeting. This will be published eight times in a year. Each Federal Reserve Bank will collect the information about the economic conditions in their District through their branch directors and banks.
3. Consumer Confidence Index: - this is being released by Conference board. This is based on the random sample of five thousand US households. The consumer confidence index depicts the consumers attitude towards spending and savings. If they are experiencing more price burden from the manufacturers they will reduce spending and thus the entire retail sales will get hit, corporate earning will come under pressure. Thus the over all economy will start slowing down. So this index reading is very important for the FX market to understand whether the economy will perform well in future also.
4. Consumer Price Index:- this is one of the effective tools to measure inflation in the economy and the effectiveness of government policy . CPI is a bundle of consumer goods and services which includes from diaper and milk to funeral expenses. It is being collected from 87 areas in US from more than 22000 retail establishments. A rise in CPI indicates inflation is increasing and price stability is under threat.
5. Employees Cost Index:- this is released every quarter. This depicts the rate of changes in the cost of labor, which is being collected from more than 50k employers. Wages and salaries encompass more than 75% of the index value. A rise in ECI indicates that household earning are going up and will see more spending from the US consumers. This is closely watched by the FED, because ECI is considered as the early warning of inflation.
6. GDP:- Gross Domestic Product is the gross measure of market activity or the output of economy. It is a tool to measure the over all productivity (goods and services) in monetary terms during the specified time period. This includes domestic consumption, government spending, investments and net trade balance. This is usually released on a yearly basis, but for FX market they will wait to see the quarterly figures of GDP to take call for the remaining period on the performance of the economy.
7. Housing start: - this shows the number of houses or building being constructed during the month. For the survey of Housing start each buildings or apartments are counted as one housing start of the month. According to US consensus housing sector shows more than 25% of dollar investments and 5% of US economy.
8. Philadelphia FED Index:- this index is considered as the best indicator which depicts the changes in everything from employment, general prices and conditions in manufacturing as well as servicing sector. In a good economy if the PFI shows the low index, then the economy will also follow the trend of slow down.
9. Producer Price Index:- this is not considered as most widely used tool like CPI to measure inflation, but obviously this will give an outlook about a wide range of areas affecting the manufacturers or producers. Investors use to pay close attention to this figure.
10. PMI (Purchasing Manager Index):- this is a composite index which includes important five major indicators. Those indicators are now orders, inventory levels, production, supplier deliveries and the employment status. This is the best indicator of factory production.
11. Retail Sales:- this is one of the major drivers of an economy, which decides the direction of total economic trend. This indicator record the total merchandise sold by the company within the retail trade. This includes the total sales of Wall-mart Inc to corner grocery stores made in US.
Conclusion:-
The above mentioned data belongs to US economy, which will affect the overall FX market reason being that dollar is the base currency for the world trade. But each economy will have data like this and can affect the local currency or FX market as a whole based on the economies strength in the world. It is not possible to brief out the entire data in this article, but the main new which hit the wires I have explained above related to dollar.
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