economic indicators

U.S. economic indicators
Atlanta Fed indexBusiness Activity Index Federal Reserve Bank of Atlanta.It represents the results of a survey of manufacturers in Atlanta for their attitudes toward the current economic situation. The numbers below the "0" are an indicator of a slowing economy. Its value is published after the 10th of each month at 09:00 EST (New York). This index has a limited impact on the market, as published after the release of an indicator of business activity at the national level (NAPM index). The growing importance of this index is a favorable factor for the growth of the dollar.Average hourly earningsAverage hourly wages.Expressed in terms of absolute value and as an index relative to the previous period. Is an indicator of potential inflation-related increase in labor costs. It has a significant impact on the market. With expectations of an increase in basic interest rates increase his value could lead to an increase in the dollar. Published, usually on the first Friday of each month at 08:30 EST (New York) in conjunction with an indicator "Nonfarm payrolls".Average workweekThe average working week.The indicator shows the average weekly working hours during the month. Published, usually on the first Friday of each month at 08:30 EST (New York) in conjunction with an indicator "Nonfarm payrolls". On the market has practically no effect. Used for long-term analysis of employment in the country. It is a "good" indicator of the labor market at different stages of the economic cycle. He is considered one of the key indicators for indicators such as "Industrial production" (Industrial Production) and "Personal income" (Personal Income), the values ​​of which are published later.Beige bookEconomic survey of the U.S. Federal Reserve "badge beech."Produced twelve Federal Reserve Banks United States. The review covers the sphere of industrial production, services, agriculture, financial institutions, labor market, real estate market. It has a limited impact on the market. When the market there are rumors of a possible change in interest rates, then pay attention to that part of the review, which refers to the state wage and price controls. Overview helpful in confirming the already established trend in the economy. Its value is published 8 times a year, on Wednesday, two weeks before the next meeting of the Open Market Committee (FOMC) Federal Reserve in the U.S. 14:00 EST (New York).Building permitsBuilding permits.The indicator shows the number of permits for new home construction. The indicator is very sensitive to changes in key interest rates as well as the construction is necessary to take bank loans. These findings, by reason of the real estate market, subject to seasonal fluctuations. The construction process is directly related to state income. Therefore, increasing the volume of construction is improving well-being and healthy development of the economy. It has a limited impact on the market. Increase in its value has a positive impact on the currency. Its value is published in the third week of each month at 08:30 EST (New York) in conjunction with an indicator "Housing starts".Business inventoriesInventories of manufactured goods, components and semi-finished products in storage.There is the following pattern: the increase in inventory for several months may indicate a stagnation in the economy. The effect of this indicator on the market is limited. However, a stable trend in its dynamics has a great impact on the market. The growth of the index has a negative impact on the dollar. Its value is published in the middle of each month at 08:30 EST (New York).Capacity utilisationCapacity use.Determines the extent to which the productive capacity of the economy. The level of 85% indicates a good balance between economic growth and inflation. Exceeding this level causes inflation in the economy. It has a limited impact on the market. The growth of this index leads to an increase in the national currency. Its value is published in the middle of each month at 09:15 EST (New York) in conjunction with the indicator "Industrial production" (Industrial Production).Chicago PMI indexBusiness Activity Index Managers Association in Chicago.It represents the results of a survey of purchasing managers in the industry of Chicago. This index affects the status of production orders, the prices of manufactured products and inventory in warehouses. The numbers below the "45-50" is an indicator of a slowing economy. Behind him closely watched because it is published shortly before the business activity index of the National Association of Managers (NAPM). This index has a significant impact on the market, because it may give an idea of ​​how will an indicator of business activity at the national level (NAPM). The growth of the index leads to an increase in the dollar. Its value is published on the last business day of each month at 10:00 EST (New York).Construction spendingConstruction costs.The indicator is expressed as an index relative to the previous period and as the absolute value of costs. The indicator is very sensitive to changes in key interest rates as well as the construction is necessary to take bank loans. These findings, by reason of the real estate market, subject to seasonal fluctuations. The construction process is directly related to state income. Therefore, increasing the volume of construction is improving well-being and healthy development of the economy. It has a limited impact on the market. Increase in its value has a positive impact on the currency. Its value is published, usually on the first business day of each month at 10:00 EST (New York).Consumer confidenceThe index of consumer confidence.This review is an attempt to measure the optimism of consumers. The index is calculated since 1967. First, it was equal to "100". It has a limited impact on the market because it can not reflect the real state of the economy. However, it is traditionally used to predict trends in employment and the general state of the economy. The growth of the index is a positive factor for the development of national economy and leads to an increase in the dollar. Its value is published after the 20th day of each month at 10:00 EST (New York).Consumer creditConsumer credit.Reflects the amount of Americans of credit through credit cards, personal loans and hire purchase. It is an indicator of consumer demand. The importance of this indicator suggests that consumers are not afraid to "get into debt" to meet their material needs. However, the figures are often revised and have significant seasonal variations. For example, the value of consumer credit is growing in anticipation of Christmas and New Year. It has a limited impact on the market. The growth of the index is a positive factor for the development of national economy and leads to an increase in the dollar. Its value is published around the 7th of each month at 15:00 EST (New York).Consumer price index (CPI)Consumer Price Index.Determines the change in the level of retail prices for the "basket" of goods and services. The consumer price index is considered more reliable if it does not take into account food and energy industries. In calculating the index takes into account the price of imported goods and services. Consumer Price Index is the main indicator of inflation in the country. This index is analyzed together with the measure "PPI" (Producer Price Index). If the economy develops in normal conditions, the increase in CPI and PPI can lead to an increase in key interest rates in the country. This, in turn, leads to an increase in the dollar, as it increases the attractiveness of investing in currencies with higher interest rates. Its value is published in the middle of each month (soon after the index PPI) at 08:30 EST (New York).Current account (Balance of payments)The balance of payments.Is the ratio between the amount of payments received from abroad, and the amount of payments going abroad. If arriving in the country exceed payments payments to other countries and international organizations, the balance of payments is active (surplus), if the opposite - that passive (negative balance). The surplus (or decrease in the deficit) is a favorable factor for the growth of the national currency. It has a limited impact on the market. Its value is published every quarter, in the middle of the month of publication of 10:00 EST (New York).Durable goods ordersOrders for durable goods.For durable goods, those goods with a lifetime of more than three years. These include cars, furniture, etc. In order to highlight the variability inherent in the military and transportation orders, the indicator of release rates, which do not include orders for the defense industry (Durable goods orders excluding defence) and transport orders (Durable goods orders excluding transportation). This indicator is important for the market because it gives an idea about the confidence of consumers of these products in the current economic situation. Since durable goods are quite expensive, the increase in the number of orders for these shows consumers' willingness to spend on them their money. Thus, the growth of this indicator is a positive factor for economic development and leads to an increase in the national currency. Its value is published in the fourth week of each month at 08:30 EST (New York).Employment cost indexEmployment cost index.It includes wages and unemployment benefits. It can serve as an indicator of the presence of inflationary pressures in the economy. Employment cost index is one of those indicators for which closely followed the Federal Reserve in conducting its monetary policy (and that says a lot). With expectations of an increase in basic interest rates increase its value leads to an increase in the dollar. Used for medium-and long-term forecasts. Its value is published every quarter, after the 20th day of publication month at 08:30 EST (New York).Existing home salesThe number of sold houses built earlier.Shows the number of homes sold in the secondary market for the year. Can give an idea of ​​the optimism of consumers (consumer confidence) and their ability to buy expensive things. These findings, by reason of the real estate market, subject to seasonal fluctuations. The construction process is directly related to state income. Therefore, increasing the volume of construction is improving well-being and healthy development of the economy. It has a limited impact on the market. Increase in its value has a positive impact on the currency. Its value is published each month after the 20th day at 10:00 EST (New York).Export pricesPrices for export.The index reflects changes in export prices for the month. Is an indicator of inflation. It has a limited impact on the market. With expectations of an increase in basic interest rates increase the value of the index leads to an increase in the dollar. Its value is published each month around the 10th to 08:30 EST (New York) in conjunction with an indicator "Import prices".Factory ordersProduction orders.Factory orders include orders for durable goods (more than 50% of all orders) and short-term use. The goods are nondurable food, clothing, light industry goods and products, designed for operation with durable goods. For durable goods, those goods with a lifetime of more than three years. These include cars, furniture, etc. The indicator "Production Orders" has a limited impact on the market. Particular attention is paid to trends in its development. The growth of the index is a positive factor for the development of national economy and leads to an increase in the dollar. Its value is published in the first days of each month at 10:00 EST (New York).Federal budgetThe state budget.Characterizes the relationship between income and expenditure of the state. If you exceed the level of state revenues over expenditures generated a surplus. If you exceed the level of state spending on its income produced a negative balance (deficit). This index has a negligible impact on the market. Usually it is used for long-term economic analysis. Budget deficit seen in the context of other indicators: the index of industrial prices (PPI), consumer price index (CPI), monetary aggregates (M1, M2, M3), etc. Its value is published around the 20th of each month at 14:00 EST (New York).GDP - Gross domestic productGross domestic product (GDP).Is the main indicator that reflects the state of the national economy. According to the Keynesian model of economic development, GDP can be summarized as follows: GDP = C + I + S + E - M, where C - consumption, I - investment, S - public expenditure, E - exports, M - imports. GDP is expressed as an index relative to the previous period, and in terms of absolute value sum of the prices of manufactured goods and services. It has a significant impact on the market. GDP growth leads to an increase in the national currency.GDP advanceGross domestic product (GDP) - preliminary value.This indicator is the first step of the three levels of GDP data, which are published every quarter. They go as follows: advance - provisional (revised) - final. Its value is published every quarter, after the 20th day of publication month at 08:30 EST (New York).GDP deflatorGDP deflator.This ratio is the current value of GDP to its base value. Reflects the magnitude of the inflationary component in the value of GDP. Published simultaneously with GDP. It has a significant impact on the market. With expectations of an increase in basic interest rates increase its value leads to an increase in the dollar.GDP finalGross domestic product (GDP) - the final value.This update "of the revised value of" GDP (provisional). Most often the differences between them are minimal. Therefore these figures do not surprise the market. Its value is published in the next month after the publication of "GDP provisional" after the 20th day at 08:30 EST (New York).GDP provisional (revised)Gross domestic product (GDP) - the revised value.This update (revised) "prior value" of GDP (advance). Published next month after the publication of "GDP advance" after the 20th day of a 08:30 EST (New York).Help-wanted indexThe index number of required workers.Characterizes the volume of adverts published in newspapers on hiring employees. 1987 was laid over the base, then its value was "100". With his analysis of the use of "moving averages" (moving average). If the moving average shows a trend change in the index for several months, it could be a sign of the changing situation on the labor market. Also, the index can give an idea about a possible change in economic conditions in different regions of the country. Almost no effect on the market. Its influence is limited to what is taken into account only a limited number of major regional newspapers. Its value is published, usually on the last Thursday of each month at 10:00 EST (New York).Housing startsConstruction of new homes.The indicator shows the number of new homes, whose construction has already begun. He is very sensitive to changes in key interest rates in the country, since the construction is necessary to take bank loans. These findings, by reason of the real estate market, subject to seasonal fluctuations. The construction process is directly related to state income. Therefore, increasing the volume of construction is improving well-being and healthy development of the economy. It has a limited impact on the market. Increase in its value has a positive impact on the currency. Its value is published in the third week of each month at 08:30 EST (New York) in conjunction with an indicator "Building permits".Humphrey-Hawkins testimonyThis is the speech of the U.S. Federal Reserve System (Federal Reserve) (now it's Alan Greenspan) to the two banking committees of the U.S. Congress.This performance takes place twice a year: winter and summer. The two houses of Congress (The Senate and House) are swapped about someone whose committee has once again listen to the report first. The report sheds light on new plans and goals of the Federal Reserve in conducting monetary policy. Behind him closely watched all the market players and trying to find a hint of the possible actions of the Fed in the future change in the basic interest rates. Speech has a significant impact on the market. This is one of the most important and significant events for the financial market.

The importance of data

The importance of economic data

In order to distinguish four fundamental analysis of currency - the zone. In dollar zone includes the countries of America, led by the United States, in the sterling area - UK and its former colonies. Yenovaya area includes all Asian countries led by Japan. The euro zone - a country in Western, Central and Eastern Europe, in part, led by Germany. The following table shows the possible influence of economic data on the price movement of currencies in the sample to the dollar zone. Often, the price movement depends on the current state of the economy and the possible impact of the reported data on changes in interest rates.
In analyzing the situation on the market should pay attention to the following indicators:
GROSS NATIONAL PRODUCT - Gross National Product (GNP)
The importance of the indicator: 1Published by: Bureau of Economic Analysis U.S. Department of Commerce.Available: 20 - 30 of the month.Frequency: Quarterly report (monthly).Volatility: Medium.Market reaction: GNP ^ = ^ dollar exchange rate.GNP v = v the dollar.Note: One of the most important economic indicators, as more fully reflects the economic activity.
GROSS DOMESTIC PRODUCT - Gross domestic product (GDP)
The importance of the indicator: 1Published by: Bureau of Economic Analysis U.S. Department of Commerce.Available: 20 - 30 of the month.Frequency: Quarterly report (monthly).Volatility: Medium.Market Reaction: GDP ^ = ^ dollar exchange rate.GDP v = v the dollar. Note: One of the most important economic indicators, as more fully reflects the economic activity.
TRADE BALANCE - Balance of trade
The importance of the indicator: 1Published by: Bureau of Economic Analysis U.S. Department of Commerce.Available: 15 - 17 of each month.Frequency: Monthly.Volatility: Moderate.The reaction of the markets:Trade balance ^ = ^ dollar exchange rate.Trade balance v = v the dollar.
EMPLOYMENT & UNEMPLOYMENT - Employment and Unemployment
The importance of the indicator: 1Published by: Bureau of Labor Statistics of the American State Department of Labor.Availability: 1 - 7 working day.Frequency: Monthly.Volatility: Medium.The reaction of the markets:Payroll employment (employees) ^ ^ dollar exchange rate.Payroll employment (employees) v = v the dollar.Unemployment rate (unemployment) ^ = v the dollar.Unemployment rate (unemployment) v = ^ dollar exchange rate.Note: The indicator, which allows to predict many other economic indicators.
INDUSTRIAL PRODUCTION AND CAPACITY UTILISATION - Industrial production and capacity to consume
The importance of the indicator: 2Published by: Research Department Federal Reserve.Available: 14 - 17 of the month.Frequency: Monthly.Volatility: Low.Market reaction: The impact on exchange rates, as a rule, weak, dependent on the current economic situation.
RETAIL SALES - Retail Sales
The importance of the indicator: 2Published by: Bureau of Economic Analysis U.S. Department of Commerce.Available: 9 - 16 working day.Frequency: Monthly.Volatility: Medium.Market reaction: The impact on the dollar depends on the concomitant economic situation.Note: It is an indicator of inflation.
PRODUCER PRICE INDEX - Producer Price Index
The importance of the indicator: 2Published by: Bureau of Labor Statistics of the American State Department of Labor.Available: 9 - 16 working day.Frequency: Monthly.Volatility: Medium.Market reaction: The impact on the dollar depends on the concomitant economic situation.Note: When publishing the data simultaneously with the CPI index the importance of PPI - 1. Is an indicator of inflation.
CONSUMER PRICE INDEX (CPI) - Consumer price index
The importance of the indicator: 2Published by: Bureau of Labor Statistics of the American State Department of Labor.Available: 15 - 21 of each month.Frequency: Monthly.Volatility: Moderate.Market reaction: The impact on the dollar depends on the concomitant economic situation.Note: When you publish the data along with the importance of PPI index CPI - 1. Is an indicator of inflation.
PERSONAL INCOME AND CONSUMPTION EXPENDITURES - Private incomes and consumer spending
The importance of the indicator: 2Published by: Bureau of Economic Analysis U.S. Department of Commerce.Available: 22 - 31 of each month.Frequency: Monthly.Volatility: Moderate.The reaction of the markets:Income ^ = ^ dollar exchange rate.Income v = v the dollar.Consumption ^ = ^ dollar exchange rate.Consumption v = v the dollar.Note: Private consumption is very important as it determines, more than half of GDP.
CAR SALES - Sales of cars
The importance of the indicator: 3Published by: car manufacturers.Availability: The first and third business day after the end of the period.Frequency: Monthly.Volatility: Medium.The reaction of the markets:Car Sales ^ = ^ dollar exchange rate.Car Sales v = v the dollar.Note: One of the first indicators published within a month. A leading indicator - indicates a change in economic growth in the future.
NATIONAL ASSOCIATION OF PURCHASING MANAGER'S INDEX (NAPM) - The index of business activity of the National Association of Managers
The importance of the indicator: 3Published by The National Association of Managers.Availability: The first day of the month.Frequency: Monthly.Volatility: Medium.The reaction of the markets:NAPM ^ = ^ dollar exchange rate.NAPM v = v the dollar.Note: The indicator, fully evaluating the manufacturing sector of the economy.
DURABLE GOODS ORDERS - Orders for durable goods
The importance of the indicator: 3Published by: Bureau of Labor Statistics of the American State Department of Labor.Available: 19 - 27 of each month.Frequency: Monthly.Volatility: Very High.The reaction of the markets: Weak.
NEW HOME SALES - Sales of new homes
The importance of the indicator: 3Published: Census Bureau U.S. Department of Commerce.Available: 28th of this year - four of the next month.Frequency: Monthly.Volatility: Moderate.The reaction of the markets:New Home Sales ^ = ^ dollar exchange rate.New Home Sales v = v the dollar.Note: It is a leading indicator. During the winter months the volatility indicator increases.
CONSTRUCTION SPENDING - construction spending
The importance of the indicator: 3Published: Census Bureau U.S. Department of Commerce.Availability: The first working day of the month.Frequency: Monthly.Volatility: High.The reaction of the markets:Construction Spending ^ = ^ dollar exchange rate.Construction Spending v = v the dollar.Note: Attention! when reviewing the data deviation can be very significant.
FACTORY ORDERS AND MANUFACTURING INVENTORIES - Industrial orders and production supplies
The importance of the indicator: 4Published: Census Bureau U.S. Department of Commerce.Available: Last day of the month.Frequency: Monthly.Volatility: Very High.The reaction of the markets: Weak.Note: As a rule, the data do not contain much new information.
In this case, it is understood that in some cases may dominate the numerical value of less important factor or group of these factors on the degree of influence is traditionally more significant factor. So, order forecasts should take into account all indicators of economic development ...

Fundamental factors affecting the FOREX market

Fundamental factors affecting the FOREX market
Federal Reserve Bank (Fed) (Federal Reserve): The Central Bank of the United States regulates three mechanisms of monetary policy: open market operations (open market operations), the discount rate (the discount rate) and the reserve requirement (reserve requirements). Board of Governors of the Federal Reserve System is responsible for interest rates and reserve requirements. Federal Open Market Committee is responsible for open market operations. Using these three tools, the Fed influences the amount of funds that depository institutions hold at Federal Reserve Bank and, thus, changing the interest rate on short-term loans (the federal funds rate).
Federal Open Market Committee (FOMC) Federal Open Market Committee: FOMC is responsible for making decisions on monetary policy, including changes in interest rates, which is 8 times a year. At these meetings, the Committee considers the economic and financial conditions, determines monetary policy and assesses the long-term goals of price stability and economic growth. A committee of 12 members composed of 7 members of the Governing Council President Federal Reserve Bank of New York, while the remaining four places are occupied by a one-year term at a time each of the presidents of 11 other Reserve Banks. One place to claim the presidents of banks in Boston, Philadelphia and Richmond, on the other - Cleveland and Chicago, the third - Atlanta, St.. Louis and Dallas, the last goes to the president of Bank of Minneapolis, Kansas City or San Francisco. Non-voting Reserve Bank presidents attend committee meetings, participate in discussions and contribute to policy development committee. At a meeting held on November 1, Committee decided to raise interest rates on short-term loans at 25 basis points to 4%. During the year the FOMC raised rates by a quarter percent at each meeting. The last meeting of this year will be held on December 13. In 2006, the scheduled meeting: January 31, March 28, May 10, June 28-30, August 8, September 20, October 24, December 12.
Council members with voting rights in 2005:

    Alan Greenspan, the Federal Reserve board member, chairman;
    Timothy F. Geithner, New York, vice-chairman;
    Susan Schmidt Bies, Member of the Board of Governors Federal Reserve;
    Roger W. Ferguson, Jr., Member of the Board of Governors Federal Reserve;
    Richard W. Fisher, Dallas;
    Donald L. Kohn, member of the Board of Governors Federal Reserve;
    Michael H. Moskow, Chicago;
    Mark W. Olson, a member of the Board of Governors of the Federal Reserve;
    Anthony M. Santomero, Philadelphia;
    Gary H. Stern, Minneapolis.
Alternate members:

    Jack Guynn, Atlanta;
    Jeffrey M. Lacker, Richmond;
    Sandra Pianalto, Cleveland;
    Janet L. Yellen, San Francisco;
    Christine M. Cumming, First Vice-President, New York.
Fed Funds Rate (Interest rate): Funds rate FED, it is obvious that most accurately reflects the direction of rate changes. This is the rate that depository institutions pay each other for overnight loan. FED announces a change funds rate when it wants to give clear signals of monetary policy. These ads typically have a large impact on all stocks, bonds and currency markets.
Discount Rate (Discount Rate) interest rate the FED charges commercial banks. Although this is more of a symbolic value, it changes also imply clear signals of a policy. Discount rate - almost always less than the rate of funds.
Treasury (Treasury). The U.S. Treasury is responsible for servicing the government debt and the decision to finance the budget. The Treasury is not talking about monetary policy, but his statements on the dollar have a strong influence on the currency. Occupy key positions:

    John Snow, Treasury secretary, was appointed by President George W. Bush 3 Feb. 2003;
    Robert M. Kimmitt, Assistant Secretary, has served since August 16, 2005;
30-year Treasury Bond (30-year Treasuries): 30-year bonds, also known as long bonds. They are compared with other bonds had more reliable, as provided by the American pravitelstvom.Eto most important indicator of inflation expectations in the markets. Interest rates on 30-year bonds is higher than on a Short-securities to offset the risk associated with increasing duration of the period. Markets likely to use quantity (the price), when it comes to levels of debt securities. As with all obligations of the 30-year treasury bonds is inversely proportional to price. There is no clear correlation between long-Bond and the U.S. dollar. But usually kept following relationship - falling value of the bond (increase amount) due to inflationary concerns may pressure the dollar. The rise may also be the result of strong economic data. Depending on the stage of economic cycle, strong economic data may have different effects on the dollar. If there is no threat of inflation - the strong economic data may raise a dollar. But from time to time, when the threat of inflation (higher interest rates), strong data normally hurt the dollar, due to the sale of bonds. Financial or political turmoil in the markets of third world countries is a hot interest in U.S. Treasuries due to their safe nature, thus helping the dollar.
10-year Treasury Note (10-year treasury notes): FX markets are usually checked with a 10-year-old tickets by comparing them with similar number abroad, namely, for the Euro (German 10 - year bund), yen (10-year JGB ) and the pound (10-year gilt). The presence of a spread (the difference in numbers) between the number of 10-year U.S. Treasury notes and U.S. commitments, affect the exchange rate. More U.S. treasury bills is generally beneficial to the U.S. dollar against foreign currencies.
3-month Eurodollar Deposits (3-month Eurodollar deposits): The interest rate on 3-month dollar deposits in banks outside the U.S.. It serves as a valuable benchmark for determining interest rate differentials to help estimate exchange rates. For example, let's take USD / JPY, a large interest rate differential in favor of the eurodollar against the euro - probably, USD / JPY will rise. Sometimes, because of the influence of other factors, this relationship is not supported.
The most important economic data coming out in the U.S.:

    labor reports include two surveys: survey of 60,000 households, resulting in determining the level of unemployment, and research data in the Payroll nonfarm 375,000 businesses and government agencies, it is determined by the number of new jobs created in non-agricultural sector The average workweek and average hourly earnings.
    GDP (gross domestic product) (GNP) is the final indicator of the economy should be seen primarily indicators that affect it and are its components (industrial production (Industrial Production), personal income and spending (Personal Income & Spending), costs construction (Construction Spending), etc.). Report on the GDP data are published Bureau of Statistics U.S. Department of Commerce (The Census Bureau of the Department of Commerce) each quarter. Statistics for the previous quarter is published on the third or fourth week of the month at 8:30 EST (New York), followed by revision. These come in the following sequence: preliminary (GDP advance) - revised (GDP provisional (revised)) - Final (GDP final).
    CPI (comsumer price index) (consumer price index) determines the change in the level of retail prices for goods and services included in the consumer fixed "basket". As part of "basket" of goods represented 44.1% and 55.9% - services. It is the main measure of inflation in the country. Consumer Price Index is analyzed together with the producer price index (PPI). If the economy develops in normal conditions, the growth rates CPI and PPI can lead to an increase in basic interest rates in the country. This, in turn, leads to an increase in the dollar, as it increases the attractiveness of investing in currencies with higher interest rate. The indicator is influenced by such factors as the volume of money supply (aggregate M2) and producer prices and import prices (which are counted in calculating the index.) indicator published by the Bureau of Accounting Employment U.S. Department of Labor (The Bureau of Labor Statistics of the Department of Labor) in the middle of each month (Tuesday or Thursday) will soon after the PPI index to 08:30 EST (New York).
    PPI (Producer Price Index) (PPI) measures how much the producers receive for their products wholesale. The index includes the prices of three types of goods: raw materials, intermediates and final goods. Is another way to determine the rate of inflation in the country (other than CPI). Published in the second full week of each month and reflects data from the previous month.
    Nonfarm payrolls determines the number of new jobs created in neselskohozyaysvennyh sectors for the month. The data are adjusted to account for seasonal fluctuations and changes in base rates. Published by the Bureau of Accounting Employment U.S. Department of Labor (The Bureau of Labor Statistics of the Department of Labor) on the first Friday of each month at 8:30 EST (New York).
    PPI (Producer Index) (PPI) reflects the dynamics of change in prices to sell their products domestic producers at the wholesale level implementation. The report is based on a monthly comparison of prices for 3500 types of products, factors which are calculated in proportion to their contribution to GDP. PPI was normalized to 100 at the end of 1982. The report is published by the Bureau of Accounting Department of Labor Employment, usually around the 11th of each month at 08:30 EST (New York).
    NAPM index - a measure of the health of the productive sector, or more broadly across the economy, calculated on the basis of observations of the purchasing managers and analysis of data on new orders, production, employment, deliveries and inventory, which is considered in order of decreasing importance. The index is based on a survey of more than 250 companies within twenty-one industry, covering all 50 states. These go on the first business day of the month at 10:00 EST (New York) and reflects the data of the previous month. The value of more than 50% indicates that manufacturing is growing, while a reading below 50% means a fall. NAPM index is thought to be an early indicator of inflationary pressure.
    CCI (Consumer Confidence Index) (index of consumer sentiment) reflects consumers' willingness to spend their incomes. The index is calculated from observations of 5000 households, non-representative sample of the population. High consumer power can mitigate the economic slowdown and to enhance its recovery. Published every last Tuesday of each month at 10:30 EST (New York).
    Productivity report (a report on labor productivity) indicates how many products produced by one worker. Many economists believe that productivity growth enables an economy to grow, while not causing the inflation rate as opposed to wage increases. The report is published seven numbers (or the nearest working day) in January, April, July and October, 8:30 EST (New York).
    ECI (Employment Cost Index) (index of labor costs) is used to track inflation. Determines the change in the cost of wages, profits and bonuses for certain groups of employees. The reason this indicator is used to determine the level of inflation is simple: an increase in wages will soon lead to higher prices (ie inflation). In conjunction with a report on labor productivity ECI can show whether a reasonable increase in wages. The report is published on the last working day of January, April, July and October at 8:30 EST (New York).
    Beige Book (beige book) - known informally as the Fed report (official name - "Summary of comments on the current economic situation in the Federal Reserve Districts"). Is a digest of reports 12 reserve banks in the U.S. that characterize the sphere of industrial production, services, agriculture, financial institutions, labor market, real estate market. Is an indicator of future actions FOMC. Published 8 times a year on Wednesday, two weeks before the meeting of the Federal Open Market Committee. The latest report was published on November 30 14:15 EST (New York).
Cross Rate Effect
Price of the dollar against the single currency are sometimes pushed another currency pair (exchange rate), which may not include the dollar. For example, a sharp rise in the yen against the euro (falling EUR / JPY) may lead to an overall reduction of the euro, including a drop in EUR / USD.

Introduction to fundamental analysis

Introduction to fundamental analysis
The most important and challenging component of foreign exchange dealing is the ability to analyze trends in the market and, accordingly, to anticipate what factors and how to affect exchange rates. In the movement of prices laid down as the possibility of quick profit, or the opposite - the possibility of rapid and significant losses. Therefore, the correct prediction of market movements, the assessment of certain events, as well as manipulation of rumors and expectations - a necessary part of the broker or dealer, and his pledge of success. There are a huge number of factors that affect how the entire foreign exchange market as a whole and on individual currencies.
There are two basic ways to analyze the situation on the market - fundamental and technical. The first is assessing the situation in terms of political, economic, financial and credit policies. The second is based on the methods of graphic research and analysis based on mathematical principles.
As part of fundamental analysis examines the various reports of the monetary and financial developments in the world, the phenomenon of political and economic life as individual countries and the international community as a whole, which may affect the development of the foreign exchange market, the analysis to which the change in exchange rates are may result. It is important information on markets and major companies such as market-makers, interest rates of central banks, the government's economic policy, possible changes in national political life, as well as all sorts of rumors and expectations. Fundamental analysis - one of the most difficult parts - and at the same time, one of the key parts of the forex market. To conduct fundamental analysis is more complicated than any other, because the same factors are in different conditions unequal value on the market, or may become a decisive absolutely insignificant. You need to know the relationship and mutual influence of two different currencies, reflecting the relationship between the various states, the history of currency, determine the cumulative result of various economic measures and establish the relationship between absolutely unrelated at first glance events. In addition to some original and most formal rules, there is most need work experience in the foreign exchange market.
Fundamental factors are estimated, usually from two angles:in terms of influence on official discount rate;in terms of state of the national economy.

Fundamental analysis
Fundamental factors are the key macroeconomic indicators the state of the national economy, working in the medium term, influencing the foreign exchange market participants and the level of the exchange kursa.Agenstvo Reuters publishes a special page in the main forecasts of economic indicators developed countries: ECI / I. Usually, this macroeconomic statistics published by national statistical offices (in the U.S. - the statistical bureau of the ministry, in Russia, Goskomstat of Russia). News agency Reuters gives users fresh statistics on the time of publication (release of data). Known schedule the publication of statistics of different countries: what day and what time or another pokazatli (figures) will be officially announced, and immediately transferred to the system, Reuters, emerged on the screen reyterovskih monitors around the world.Broken down by day of week are average forecast of economists and research centers on the expected performance of National Statistics (Column FORECAST). Given time of publication, and previous indicator values ​​(column REVS). These data are carefully analyzed by dealers and analytical departments of banks, and, based on the scenario worked out the exchange rate behavior and tactics of arbitrage.Usually in world currency markets, where 80 percent of arbitrage transactions are conducted with the U.S. dollar, the biggest impact are the data on the U.S. economy, which leads to an increase or decrease in the dollar relative to other currencies. We can distinguish two aspects of temporal influence of fundamentals on the exchange rate:- Long-term impact, that is, given a set of fundamental factors will determine the status of the national economy, and hence the trend of exchange rate changes over months and years. This medium-term forecasting of the course is used to open the strategic positions. For example, long-term negative U.S. trade balance with Japan is the cause of a permanent depreciation of the dollar against the yen (from 250 in 1985 to 80 in 1995). For medium-and long-term effects are taken into account the statistical indicators for more than a month period (quarter, year).- Short-term, that is, the influence of the published statistical indicators on the exchange rate in effect for several hours or sometimes minutes. For example, the publication of data to reduce the U.S. trade deficit with Japan could lead to some increase in the dollar against the yen in a few hours (from 88.20 to 89.50). Short-term impact on the course have indicators for short periods (week or month).Foreign exchange dealers, the decision to buy or sell currencies after appearing on the screens of monitors messages about the importance of economic indicators, should immediately answer some questions, the correct solution of which depends on the size of the profit or loss.
Exchange rate by purchasing power parity(Purchasing Power Parity Rate - PPP Rate)The course of PPP is the ideal exchange rate, calculated as a weighted average price ratio for the standard basket of industrial, consumer goods and services between the two countries. In an ideal model of the formation rate based on price only trade between the two countries with each other the real exchange rate would be equal to the rate of purchasing power parity.In its simplest form, abstracting from the actual trading volume and share of different goods in consumption, the formula for finding a course on purchasing power parity can be as follows: where and RiDEM PiUSD - sootvetvetstvenno prices in German marks and U.S. dollars for goods and services in Germany and United States, included in the standard basket of industrial and private consumption in these countries; Wi - the share of these goods and services in the industrial and private consumption (GNP or national income); n - number of products included in korzinu.Chem significant sample, the more representative in result of the exchange rate.Method for determining and adjusting the rate according to purchasing power parity exchange peculiar system of fixed exchange rates (the gold standard, Bretton Woods system), currently used by countries of the European Monetary System (European currencies tied to each other and are adjusted based on purchasing power parity). In the Soviet Union before the start of reforms in the sphere of currency regulation dollar to the ruble from time to time determined by the method of purchasing power parity and then weekly adjusted according to fluctuations in the dollar against other currencies.According to experts in June 1994. currency dollar exchange rate to the deutsche mark by purchasing power parity was:on consumer prices (consumer prices) 1.68Industrial prices (producer prices) 1.82Cost of services (services prices) 2.05_________________________________________On average, 1.82In fact the dollar to the brand in June 1994 stood at 1.65, then there is a lot lower than the PPP.In the long run (several years) the real exchange rate tends to fluctuate around the value of purchasing power parity, but parity itself is constantly recalculated as changes in price levels in comparable countries (for example, in 1990. The dollar to the German mark at purchasing power parity amounted to 2.13) .The theory of purchasing power parity (PPP) is attempting to consolidate the economic factors that explain the formation of supply and demand of currencies and their dynamics.One of the fundamental concepts underlying the theory of PPP - the rule of one price: goods cost the same - purchased directly on foreign exchange, or after conversion. In other words, for every product we have the following expression:Pi (t) = S (t) x P `i (t)t - index of point in time;i - index of the goods;S (t) - current exchange rate;Pi (t) - the price of goods in national currency;P `i (t) - the price of goods in foreign currency.In this formulation, the rules laid down one price hypothesis of zero distribution costs, the absence of trade barriers (both tariff and nontariff) and homogeneity of products. The rule of one price is valid only if all items have equal weight in both countries. Hence seriously conclude that if economic structures are different, then the theory of PPP is wrong, even if the rule of one price holds.In the relativistic version of the theory of PPP does not come from the absolute levels of prices, and their indexes. Thus, measured not purchasing power parity, and their index:P (t + T) / P (t) = [S (t + T) / S (t)] x [P `(t + T) / P` (t)]This formulation of the theory of PPP rather than its absolute version. Nevertheless, it is not good because it allows failures in cases where the production structure and relative prices of goods in different economies are changing. However, at short intervals vremeniteoriya PPP would provide an explanation dostatochnopravdopodobnye trends of exchange rate changes.The theory of PPP is also good because it allows to take into account the impact of inflation. Let f - the rate of inflation in the economy, and f `- the rate of inflation in the foreign economy. Then, by definition of inflation,P (t + T)--------- = 1 + fP (t) P `(t + T)---------- = 1 + f `P `(t)Using the definition of a relativistic theory of PPP, we obtain:S (t + T)---------S (t) = 1 + f-------1 + f `S (t + T) - S (t)----------------S (t) = f - f `-------1 + f `The meaning of this expression is that a revaluation occurs when national inflation is stronger than overseas.PPP calculations are widely practiced for the development of national economic policy. Central banks rely on the PPP estimates in determining the parities of their currencies. Of particular importance is the control for the real exchange rate (R):P (t + T) / P (t)R (t + T) = --------------------------------------[S (t + T) / S (t)] x [P `(t + T) / P` (t)]If there is, R <1, then the real purchasing power of the national currency relative to foreign goods falls, and increasing export competitiveness and vice versa, R> 1 means that the domestic currency depreciates faster than the differential between domestic and foreign inflation.
Gross National Product - GNP(Gross National Product - GNP)Gross national product is a key indicator of the national economy, and includes as a component less important economic indicators. GNP formula is as follows: GNP = C + I + G + X - M,where C - Consumption (Consumption); I - Investments (Investments); G - government spending (Government Spendings); X - Export (Export); M - imports (Import).Sgschestvuet a direct correlation between changes in GNP and exchange rates:GNP ^ - ^ RATE CURRENCYThe logic here may be as follows: GDP growth means the general good state of the economy, the increase in industrial production, inflow of foreign investment in the economy, the growth of exports. Increased foreign investment and exports leads to an increase in demand for domestic currency by foreigners, which is reflected in the growth rate. Continuing for several years, growth in GDP leads to "overheating" economy, the growth of inflationary pressures and, consequently, to the expectation of rising interest rates (as the main anti-inflation measures), which also increases the demand for currency.
Real interest rates(Real Interest Rates)This factor is extremely important because determines the overall profitability of investments in the economy (interest on bank deposits, yield on investments in bonds, the level of the average profit rate, etc.). Changes in interest rates and currency exchange rate is directly related to:INTEREST RATES ^ - ^ EXCHANGE RATESpeaking of bets, you should keep in mind the real interest rate, that is, nominal interest minus inflation rates. Moreover, if nominal rates rise more slowly than inflation and GDP, the exchange rate may even decrease. For example, in the U.S. in 1994. in conditions of stable economic growth, growth rates lagged behind the growth in GNP and inflation - real interest rates tended to decrease. Federal Reserve (the U.S. central bank) for a year on several occasions raised the level of interest rates, however slightly, for fear of harsh actions to slow down the process of economic recovery (after the recession of 1990).. As a result, the dollar exchange rate to major hard currencies dropped during all of 1994. (Eg, USD / DEM has fallen from 1.76 in January to 1.48 in October 1994.).Through a deeper analysis, it should be noted that in the formation of the exchange rate of two currencies central role played by the difference in interest rates between the two countries (percent differential). If the two countries about the same level of real interest rates, characterizing the same return on investment in the economy of any country, the increase in central bank of one of the countries the level of interest rates, causes a shift in favor of profitability of investments in that currency, which increases the demand for currency and increase its rate.
Unemployment rate(Unemployment Rate)Factor of employment can be considered as two values: either the unemployment rate (that is, the percentage of unemployed to the total working-age population), or as the inverse index number of employees.The unemployment rate is usually published as a percentage: unemployment rate = 8.6%; while there is an inverse dependence of the change in the unemployment rate and exchange rate:UNEMPLOYMENT v - ^ EXCHANGE RATEIn accordance with modern economic theory can not be reached zero rate of unemployment (there is always a seasonal, structural, frictional unemployment). Therefore, macroeconomic full employment for industrial countries corresponds to the unemployment rate of approximately 6%.Change of employment (particularly in the U.S.) describes the rate NFP - Non-Farm Payrolls, that is, employment in nonagricultural industries. The growth rate describes the NFP job growth and leads to an increase in the dollar.
Inflation(Inflation)The rate of inflation or devaluation of national currency, measured in the growth rate of prices. There are two rate changes in price levels:PPI (Producer Price Index) - index of changes in production prices (wholesale shipments of manufactured goods). This index, calculated as a percentage of the previous period, is the primary sign of inflation, as producer prices are included in consumer prices;CPI (Consumer Price Index) - index of consumer prices - a direct indicator of inflation.The rate of inflation and exchange rate changes are inversely related:^ INFLATION - v EXCHANGE RATEOne of the indicators that affect the state of inflation, is the amount of money in circulation (money supply), consisting of several monetary aggregates, differing in the degree of liquidity - of M1 (in the UK M0) to the M4. The biggest impact of inflation has increased M1 - cash and balances in current accounts on demand.Inflation has a strong effect on employment. In 1958, the British economist A. Phillips proposed a graphical model of demand inflation, stating such an effect. Using the data in their work the British statistics for 1861 years. He built a curve, clearly showing the inverse relationship between changes in wage rates and unemployment rates. Along the curve A. Phillips found that an increase in unemployment in Britain in excess of 2.5-3% led to a sharp slowdown in prices and wages. Phillips concluded that the government can use an increase in inflation to combat unemployment. Later, this conclusion is theoretically argued economist Robert Lipsey.Phillips curve shows the inverse relationship between inflation and unemployment rate. The higher inflation rate, the lower the unemployment rate. Also created a modification of the Phillips curve for development of economic policy. This work was done by American economists Robert Solow and Paul Samuelson. They replaced the curve in the wage rate on the growth rate of commodity prices, or inflation. With this curve, it became possible to calculate a balance between high enough levels of employment and production and the definition of price stability. If the government is considering the level of unemployment in the country as extremely high, then lowering it to be held low and monetary measures stimulating demand. This leads to increased production and job creation. Unemployment rate decreases, but simultaneously increase the rate of inflation.