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Fx Trading: Commonly Used Indexes Part 1
•ANZ Commodity Price Index •Consumer Confidence Index •Consumer Price Index •Core PCE Price Index •Employment Cost Index •Ivey Purchasing Managers Index (PCI) •PCE Price Index •Philadelphia Fed Index •Producer Price Index Understanding how these indexes work can help improve your trading techniques. You can decide which indexes fit into your style of forex trading, and which to overlook. Below we will discuss the Consumer Confidence Index, the PCE Price Index, and the Core PCE Price Index. Consumer Confidence Index The Consumer Confidence Index (CCI) is a survey of 5,000 consumers in their respective country about their current spending and economic outlook. The index is a number, with “100” representing a neutral response. A figure below 75 is “weak” and would be considered a drop in confidence. A figure above 125 is considered “strong”, indicating an increase in confidence, and perhaps spending. Although many countries use this index, updates for the U.S. market index are released monthly, on the last Tuesday at 10:00am EST. This index is important to consider in FX trading because if spending increases the value of the U.S. Dollar is likely to change. PCE Price Index Similarly to the Consumer Price Index (CPI), the PCE Price Index exists to measure inflation. When inflation rises, usually interest rates will be raised by a country’s monetary banking system. In terms of forex trading, when interest rates rise, this can in turn increase the value of that currency. However, some analysts think that the PCE is a relatively predictable figure, having little impact on markets and forex trading platforms. The PCE Price Index measures price changes (not consumer spending, but price changes) in a generalized bundle of consumer goods and services. In the U.S., the PCE Price Index is part of a report released quarterly by the Department of Commerce’s Bureaus of Economic Analysis. Core PCE Price Index The Core PCE Price Index measures the average increase in prices for all U.S domestic personal consumption items. This index is similar to the PCE Price Index. The “PCE” stands for Personal Consumption Expenditures. When comparing the Core PCE Price Index to the PCE Price Index, it’s helpful to remember the word “core”. The Core PCE Price index is less volatile that the PCE Price Index because it measures less volatile (or core) food and services. The Core PCE does not include volatile food and service prices in its index, making it relatively more stable than the standard PCE Price Index. Index figures for the Core PCE Price Index and the PCE Price Index are released quarterly. Forex Trading Platform An overall understanding of these indexes can help strengthen forex trading skills and make you just as capable as any forex broker. As you learn about these indexes, you can develop your own technique by including some indexes and excluding others. There isn’t a right or wrong way to trade, but a smart way to trade by being ahead of the knowledge curve when it comes to trading. To best maximize the potential of these indexes without risking any money, open a free forex demo account, which allows people new to FX trading to practice without using real money. After learning the ins and outs of forex resources, open a real account and invest. Article Directory: http://www.articledashboard.com Patrick Kalashnikov is a freelance writer who is knowledgeable about FX trading,and how to get started with a forex broker. For more information about forex trading, visit vertifx.com and check out www.vertifx.com/forex-blog/2011/06/fx-trading-indexes-part-1/ to view this original blog. |
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