The fundamental side of the market


Due to the fact that the majority of transactions in the foreign exchange market has a course against the dollar, more influenced by U.S. macroeconomic indicators, and can be divided into several groups.

National Association of Purchasing Managers - NAPM (National Association of Managers Index for bulk purchasing) - includes data such as orders, production, employment, inventories, delivery times, prices of exports and imports. The overall index is calculated by weighing five indices orders - 30%, production - 25%, employment - 20% of supply - 15%, inventories - 10%. The indices are calculated for each of these categories, with a value of over 50%, reflecting an increase from the previous month, and below 50%, indicating a decline compared with the previous month. Overall index is based on a survey of companies 4.000. Because it is published on the first working day of the month, its value can anticipate the message about the volume of industrial production, published in the middle of the month (government studies include data over 60,000 companies).

The index value of more than 50% indicates a rise of production, less than 50% - of the recession. NAPM growth rate increases. An example is the publication of the NAPM March 1, 1999 increase in February amounted to 52.4% from 49.5% in January.

NAPM index is one of the first comprehensive economic characteristics of the month. During inflationary concerns prices for deliveries from vendors often define the market reaction to the economic processes. Many economists do not include the index in the projections, but the stock market usually reacts to his appearance.

As already noted, it is published on the first working day of the month. It can be viewed as an index of business activity.

Factory Orders (orders for factory products). This indicator shows the need of industrial production in durables and non-durables. Increasing the value of this indicator characterizes the activity of production and its potential growth, while a decrease indicates decommissioning. Therefore, an increase in this index rate increases and decreases - falls.

The index is published monthly.

Durable Goods Orders (Orders for durable goods).

This indicates the need for a product with a term of more than 3 years. This is usually expensive items (such as cars), so this indicator reflects not only expectations, but the ability of the latter to spend large sums. Increase this figure positively characterizes the state of the economy and production, so it helps to increase the growth rates and the stock market, and falling currency weakens and can lead to a decrease in prices in the stock market.

The index is published monthly.

He serves as an indicator of consumer confidence, with its increase rate increases.

Inflation rates

Producer Price Index - PPI (Producer Price Index) estimates the average change in prices determined by manufacturers for their products at all stages of production. Do not include imported goods, services and taxes. Track not a single value of the index and change it for a certain period of time. Often the index is called the index of wholesale prices, because since its inception and until 1978 it was called Wholesales Price Index (WPI). In England it is still published under that title. PPI is used by analysts as an indicator of future inflation. As a rule, the markets for the appearance of this index does not react, but its growth may decrease in stock prices and growth yield instruments of credit and money markets. More attention should be paid to the core index (CORE), excluding the price of the components of such variables as energy and food prices. This is illustrated when the September 10, 1999 was aggravated due to the fall of the EURUSD publication of the U.S. producer price index for August, which, though, and showed a large increase of 0.5% compared to 0.2% in July, but the core value was -0.1% (forecast was +0.1%). Nucleus showed that inflation, but there is the effect of higher world oil prices.