Posts Tagged ‘inflation rate’

EQUITY MARKET OVERVIEW JANUARY 2010

EQUITY MARKET OVERVIEW JANUARY 2010

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The year 2009 was an unconventional year with surprises galore.

The sharp recovery in the benchmark Sensex is evident of the same.

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The year came with some shocks and some surprises, be it Satyam opening the Pandora’s Box, government coming to the rescue through fiscal stimulus or gold touching the new highs.


With appreciation of more than 75%, 2009 calendar year emerged as the best year bringing back hope and strengthening the faith and confidence of investors.

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As we welcome the New Year, let’s have a glance at how was the sunset of 2009 with the happenings in the month of December.


The month started with not much action as the indices were little changed as every rise was seen as an opportunity to book profits as fear of rising inflation barred investors from building large positions.

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The India’s industrial output jumped 11.7% in November 2009 from a year earlier, helped by stimulus measures and robust domestic demand.


The momentum in the country’s industrial output is likely to sustain in the coming months.


The facility for Indian companies to buy back their Foreign Currency Convertible Bonds (FCCBs) under the automatic route and approval route would be discontinued from January 2010 due to the improvement in the equity market.

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The central bank said it would allow non-bank financial companies which are focused on financing infrastructure projects to borrow from overseas markets under the approval route.


During the middle of the month, profit taking pulled the key benchmark indices lower.

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The worst monsoon since 1972 and flood in some parts of the country have pushed up food prices nearly to 17.28% annually in beginning of January, while the headline inflation accelerated to 7.31% in December.


The food supplies need to be boosted to stem the price rise as the current acceleration in inflation rate is not only due to loose monetary stance.


The government towards this, has cut the open sale price of wheat, while ministers have pledged to import food items that are in short supply to boost local supplies and stem inflation.

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Dollar also showed strength and sparked fears of unwinding of dollar carry trade.

The Christmas week saw a ‘Santa Claus’ rally that took the market to 19 months’ closing high in a truncated trading week.

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Further, the latest data showed that corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal.

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The corporate advance tax payments for the quarter were up 44% to Rs.48300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter.


The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.

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Amidst all this, we had the Finance Minister‘s statement that containing inflation and cutting fiscal deficit are the major challenges for the government in the short-to-medium term.


Towards this the government can even alter the proposed draft for the direct tax code to sustain the high economic growth.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

Bear and Bull – Part 1

Hello Friends here we come up with our another write up on β€œSMC Gyan Series” πŸ™‚

Have you all ever wondered that what exactly this Bull and Bear Market is ?

 

Bull markets and bear markets...what are they?

Bull markets and bear markets...what are they?

What are they? What do they look like? What’s the origin of this terminologies?

Lets Talk about it

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When we talk about bull and bear stock markets it reminds us that it’s a zoo out there. And, like any zoo, there are quite a few wild species to be found πŸ˜‰

The first two are the bulls and the bears.

Bull market is when stock prices are climbing strongly and a Bear market is when they’re languishing.

Bear Market

To be more precisely, in finance, a bear market is a market condition that occurs when the prices of shares decline or are about to decline.

Figures may vary, but if prices decrease by 15 to 20% then the market is assumed as a bear market.

In general, a bear market resumes if the government goes into recession and if the inflation rate is high.

Bull Market

A bull market is a condition of a financial market of a group of securities in which prices are rising or are expected to rise.

The term “bull market” is most often used to refer to the stock market, but can be applied to anything that is traded, such as bonds, currencies and commodities.

Bull markets are characterized by optimism, investor confidence and expectations that strong results will continue.

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Myth About Bull and Bear Markets

One common myth is that the terms “bull market” and “bear market” are derived from the way those animals attack a foe, because bears attack by swiping their paws downward and bulls toss their horns upward.

This is a useful mnemonic, but is not the true origin of the terms.

Long ago, “bear skin jobbers” were known for selling bear skins that they did not own; i.e., the bears had not yet been caught.

This was the original source of the term “bear”.

This term eventually was used to describe short sellers, speculators who sold shares that they did not own, bought after a price drop, and then delivered the shares.

Because bull and bear baiting were once popular sports, “bulls” was understood as the opposite of “bears.” I.e., the bulls were those people who bought in the expectation that a stock price would rise, not fall.

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Stay Tuned for more on this where we would touch upon if bull and bear markets are inevitable and what are the basics investors should keep in mind while trading in bear and bull market.

Inflation Moves into Positive Territory after 13 Weeks !

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The inflation finally pulled back into the positive territory for the first time since 30th May 2009.

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It remained in negative zone for 13 consecutive weeks.

India’s inflation came in at 0.12 per cent in week ended 5th September 2009, as against -0.12 per cent in the previous week.

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Meanwhile, the rate was 12.42 per cent in the corresponding week of previous year.

During the week, price indices for primary articles, manufacturing products and fuel, power, light and lubricants reported rise.

The index for primary articles increased 1.3 per cent to 274.7 (provisional) from 271.2 (provisional) the week before.

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Similarly the index for manufactured products also went up 0.1 per cent to 208.1 (provisional) from 207.9 (provisional).

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The price index for fuel, power, light and lubricants also rose slightly to 343.4 (provisional) from 343.3 (provisional) for the previous week.
However, the price of naphtha declined 7 per cent.

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The rate turned negative for the week ended 6th June 2009, for the first time since the new wholesale price index (WPI) series started in 1995.

The inflation rate had also turned negative in 1977.

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Inflation touched a high of 12.91% for the week ended 2nd August 2008 and touched a low of -1.74% on 1st August 2009.

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Gold Touches a New High of Rs 16,220 per 10 gram !

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Due to the speedy buying by stockists in advance of the festival season, in the midst of the global rates climbing to an 18-month high of $ 1,018.15 an ounce, GOLD rose by Rs 250 to touch a new high of Rs 16,220 per 10 gram in the gold market.

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However, it is said that after the metal in London increased to an 18-month high, the buying action gathered momentum as stockists indulged in buying gold.

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While, the concern was that a global economic revival may strengthen inflation in the midst of a weak dollar, enhancing demand for the metal as an alternative investment.

On the other hand, gold in overseas markets advanced 10.60 dollar, or 1.1%, to 1,018.15 dollar an ounce whereas silver coins also touched a record high of Rs 31,800 per 100 pieces.

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Further, standard gold and ornaments spurted by Rs 250 each to Rs 16,220 and Rs 16,070 per 10 gram, respectively.

On the other side, sovereign increased by RsΒ  50 to Rs 12,950 per piece of 8 gram.

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Marketmen said the precious metal might see new peaks in the coming days once the festival and marriage season starts on September 19.

Current upsurge maybe purely out of reason of stockists buying as retailers refrained from buying gold during ‘Sharaadh’, the ongoing inauspicious fortnight in Hindu mythology.

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According to analysts, gold may climb a high level of $1,100 an ounce in the overseas market in the next six months.

Silver ready shot up by Rs 700 to Rs 26,600 per kg and weekly-based delivery by Rs 910 to Rs 27,570 per kg.

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Silver coins rose to an all-time high by gaining Rs 200 to Rs 31,700 for buying and Rs 31,800 for selling of 100 pieces.

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However in between due to the increasing investment demand with the commencement of festival and marriage season, gold imports observed a huge rise during August at 21.8 tonnes as compared to the previous month where the import of the precious metal was 7.8 tonnes this year.

This shows that India’s gold imports have trebled in a gap of one month.

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Weekly Equity Update 21st-28th August :)

Weekly Update

After closing almost flat in penultimate week, in the week gone by markets closed in green terrain following the global markets which rallied to 10-month highs buoyed by renewed hopes that the global economic recovery is gathering pace and is pulling out of its deepest recession since the 1930s.

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Closer home, revival of monsoon rains, fresh buying by FIIs and firm European market boosted sentiment.

Moreover the statement made by FM that government expects GDP growth to accelerate to over 8% in 2010-11, with the economy showing signs of recovery, acted as a booster to markets.

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However it is expected that higher food prices will lead to WPI inflation accelerating to 6% in the fiscal year to March 2010.

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On the world economic front, the US economy shrank at an annual pace of 1% between April and June 2009, unchanged from an initial estimate released last month.

From the United Kingdom, its economy contracted 0.7% in the second quarter as the recession prompted companies to cut investment and inventories while consumers scaled back spending.

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Japan‘s exports tumbled and stood at 35.7% for a tenth straight month in July as demand from all of the nation’s major markets deteriorated.

Trend of all markets is up though Shanghai has topped out and moving down which is a cause of concern.

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Nifty has support between 4600-4500 and Sensex between 15500-15000.

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Once again commodities have shown the buoyancy that they can hold the support.

One or two day’s correction in the prices couldn’t break the trend of commodities. However upside is limited.

Resembling last week, current week as well is jam-packed of event risk as GDP data of many countries will release which will make commodities volatile throughout the week accordingly.

Precious metals may trade in a range with upward bias.

Back at home, to see more upside it has to trade above the level of 15000 in MCX.

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In agro commodities, buying may return in spices as recent fall in the prices has made Indian parity more competitive in international market.

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MARKET OUTLOOK

Trend of all markets is up though Shanghai has topped out and moving down which is a cause of concern.

It seems that currently US markets are determining the overall trend and our markets might be linked up with US markets now as we have broken above 4730 Nifty.

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If US markets don’t react, then we should be seeing higher levels ahead.

Nifty has support between 4600-4500 and Sensex between 15500-15000.

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EQUITY TABLES :

1. Indian and Sectoral Indices :

weekly indices update

2. BSE Movers and Shakers & IA Equity Figures

BSE Movers and Shakers & IA Equity Figures

3. NSE Movers and Shakers :

NSE Weekly Movers and Shakers

4. MONEY MARKET & ECONOMIC INDICATORS :

MONEY MARKET & ECONOMIC INDICATORS

5. GLOBAL INDICES :

Weekly GLOBAL INDICES


From the United Kingdom, its economy contracted 0.7% in the second quarter as the recession prompted companies to cut investment and inventories while consumers scaled back spending.

Weekly Equity Update 14th-21st August :)

EQUITY MARKET UPDATE1


The week gone by started on a weak note and domestic market nosedived deep into red terrain on huge selling pressure over the ground as unsatisfactory US consumer sentiment report weakened concerns about the recovery in global economy.

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In addition, weak Asian markets along with negative European markets also took huge beating on the bourses.

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Furthermore a poor monsoon rattled the markets, raising fears it could hurt economic prospects of corporates. However it is expected that market may remain volatile next week.

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In this year poor rains have raised worries about growth in India’s domestic-demand driven economy.

But a ray of hope was shown by FM saying that the government will take all the required steps to control drought.

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India has attracted 8% higher FDI to $2.58 billion in June 2009, from $2.39 billion in June 2008.

FII inflow in calendar year 2009 totaled Rs 35,773.40 crore. Inflation for the week ended 8th August stood at -1.53%with the previous week’s annual decline of -1.74%.

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MARKET OUTLOOK

Trend of world markets is still up. US and Europe were holding strong whereas a correction had come in Asia, but overall they are all up.

Shanghai looks to have topped out but till we are holding above 4450-4350 zone in Nifty, there is no need to worry.

Sensex has support between 15000-14700 levels and Nifty between 4450-4350 levels. πŸ™‚

However it is expected that market may remain volatile next week!!

Further more Global markets will also play a pivotal role in setting the direction. Inadequate monsoon rains may continue to weigh on investor sentiment. 😦

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TABLES :

1. Indian and Sectoral Indices :

weekly indices update

2. BSE Movers and Shakers & IA Equity Figures :

Weekly BSE Gainers- Losers updateπŸ™‚

3. NSE Movers and Shakers :

NSE Weekly Movers and Shakers

4. MONEY MARKET & ECONOMIC INDICATORS :

MONEY MARKET & ECONOMIC INDICATORS

5. GLOBAL INDICES :

Weekly GLOBAL INDICES

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NEWS ROUND UP

Economy

After falling for three weeks in a row, inflation rate rose to -1.53 per cent for the week ended August 8, primarily due to dearer primary articles, especially food items.

The inflation rate for the previous week ended August 1 was -1.74 per cent and stood at 12.82 per cent during the corresponding period in 2008.

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Oil & Gas

Β·Reliance Industries may sell part of its stakes in some of the overseas oil and gas blocks to lower its exploration risk.

RIL, through its wholly-owned subsidiary Reliance Exploration and Production DMZ, holds interests in 15 overseas exploration blocks and is considering farming-out a part of its stake.

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Realty/ Infrastructure

DLF, the country’s largest realty firm, bagged a 350-acre plot for Rs 1,750 crore in Haryana for developing a recreation and leisure project, making it one of the costliest land deals in recent times.

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Information Technologies

Β·Geometric Ltd has announced the release of version 2.0 of its visualisation product, 3DPaintBrush.

This is an innovative visualisation and rendering tool that helps create near photo-realistic images, animations, and videos from 2D models in real-time.

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Trend of world markets is still up. US and Europe were holding strong whereas a correction had come in Asia, but overall they are all up. Shanghai looks to have topped out but till we are holding above 4450-4350 zone in Nifty, there is no need to worry.

Relation Between Price and Inflation – How ?

Relation Between Price and Inflation

There is always a direct relation between prices of certain commodities and inflation. πŸ™‚

Let’s take the price of oil. This and inflation are connected in a cause and effect relationship.

As oil prices move up or down, inflation follows in the same direction. πŸ™‚

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The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products.

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For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

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To understand inflation, we must first understand what the word means.

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.

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When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.

A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.

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As inflation rises, every rupee you own buys a smaller percentage of a good or service.

The value of a rupee does not stay constant when there is inflation.

This value is seen by looking at its purchasing power, i.e. the real, substantial goods that money can buy.

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Because inflation is a rise in the general level of prices, it is intrinsically linked to money, as captured by the often heard refrain β€œInflation is too many dollars chasing too few goods”.

Now if demand for goods and services doesn’t fall as much, then price of goods and services go up.

Hence the retail price index goes up, and inflation takes place. πŸ™‚

Inflation does NOT however mean an increase in the general price level of goods and services within a country.

What inflation actually means is an inflation of the money supply, i.e. an increase in the total number of rupees in circulation.

An increase in the price level is a normal consequence of inflation because it depreciates the currency, lowering each rupee’s purchasing power.

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Prices and inflation

When inflation comes down, prices in the market do not come down immediately. The reasons may be many. Inflation comes down due to

* fall in consumption,

* low industrial output,

* fall in industrial commodity prices, especially crude, steel, etc.,

and

* industrial slowdowns.

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Market prices for ordinary citizen are not like that.

When supply is more than demand, industries slow down the output and the prices go up.

When inflation is down RBI reduces the interest rate, prime lending rate, etc., which increases liquidity in the economy.

Excess money is then often used for speculation with traders cornering the stock and creating artificial scarcity, thereby increasing the prices or not letting it come down.

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In conclusion, inflation will always be with us; it’s an economic fact of life.

It is not intrinsically good or bad, but it certainly does impact our lives.

Everyone knows, once the prices go up they stay up and never come down.

It has no meaning to common man if it does not translate into reasonable living standards.

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There is always a direct relation between prices of certain commodities and inflation. Let’s take the price of oil. This and inflation are connected in a cause and effect relationship. As oil prices move up or down, inflation follows in the same direction. The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products. For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

To understand inflation, we must first understand what the word means.

Inflation is an increase in the price of a basket of goods and services that represents the economy as a whole. It is an upward movement in the average level of prices, measured as an annual percentage increase. As inflation rises, every rupee you own buys a smaller percentage of a good or service.

The value of a rupee does not stay constant when there is inflation. This value is seen by looking at its purchasing power, i.e. the real, substantial goods that money can buy. Because inflation is a rise in the general level of prices, it is intrinsically linked to money, as captured by the often heard refrain β€œInflation is too many dollars chasing too few goods”.

This is not difficult to follow. Imagine a world with two commodities: Mangoes picked from mango trees, and paper money printed by the government. In a year where there is a drought and mangoes are scarce, the price of mangoes rise, as there is substantially more money chasing very few mangoes.

Now if demand for goods and services doesn’t fall as much, then price of goods and services go up. Hence the retail price index goes up, and inflation takes place.

Inflation does NOT however mean an increase in the general price level of goods and services within a country. What inflation actually means is an inflation of the money supply, i.e. an increase in the total number of rupees in circulation. An increase in the price level is a normal consequence of inflation because it depreciates the currency, lowering each rupee’s purchasing power.

Prices and inflation

There is always a direct relation between prices of certain commodities and inflation. Let’s take the price of oil. This and inflation are connected in a cause and effect relationship. As oil prices move up or down, inflation follows in the same direction. The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products. For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

However, even when inflation comes down, prices in the market do not come down immediately. The reasons may be many. Inflation comes down due to

* fall in consumption,

* low industrial output,

* fall in industrial commodity prices, especially crude, steel, etc., and

* industrial slowdowns.

Market prices for ordinary citizen are not like that. When supply is more than demand, industries slow down the output and the prices go up. When inflation is down RBI reduces the interest rate, prime lending rate, etc., which increases liquidity in the economy. Excess money is then often used for speculation with traders cornering the stock and creating artificial scarcity, thereby increasing the prices or not letting it come down.

In conclusion, inflation will always be with us; it’s an economic fact of life. It is not intrinsically good or bad, but it certainly does impact our lives. Everyone knows, once the prices go up they stay up and never come down. Negative inflation has no meaning to common man if it does not translate into reasonable living standards.

ECONOMIC INDICATORS – A Key Factor in Currency Trading : Part 2

ECONOMIC INDICATORS – A Key Factor in Currency Trading : Part 2

Now comes the question what particular aspect of economy is being revealed through Economic Indicators.

Suppose an investor is likely to know which indicators measure the growth of the economy, for which he can directly refer to the GDP releases VS. those that measure inflation which can be traced with PPI or CPI releases or employment through non-farm payrolls releases.

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After following the data for a while, he will become very familiar with the nuances of each economic indicator and what part of the economy they are measuring.

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But it doesn’t mean that all the economic indicators are equally important although they might have been created with equal importance, some have acquired much greater potential to move the markets than others.

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Market participants will place higher consideration on one statistics vs. another depending upon the state of the economy.

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Markets are mainly looking forward for only those economic indicators which are decisive factors for the particular country.

Suppose prices are not fretted with inflation rate, then the inflation data will not keenly be observed or reacted with markets.

On the contrary, if economic growth is vexing problem, then the GDP or changes in the employment data will be eagerly anticipated and could impetuous remarkable volatility with the relevant releases.

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So, it is important that the data should fall under the expectations of the market.

There are economists and market pundits who are forecasting for each indicator when their data is trying to hit the wires.

So while knowing the economic consequences of an unexpected monthly rise of 0.4% in the producer price index (PPI) is not much more important for the investors’ short-term trading decisions then to know that this month the market is looking for PPI to fall by 0.2%.

For just looking upon headlines is not the pathway for deriving an appropriate decision.

The headline figure is for amateurs as if closely watched detail in the pay-roll data, the non- farm payroll figures are relevant.

PPI for example, is for measuring the changes in producer prices.

But it is closely watched not only for producer prices but also for ex-food and energy as if eyed upon the trader prospect the food and energy component of the data is too volatile and subject to revisions on a month-to-month basis to provide an accurate reading on the changes in producer prices.

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The important thing is that not all countries are as efficient as the G7 in releasing this information.:(

And the most valuable thing to notice is that if the trader is going to trade the currency of a particular country, he needs to find out the particulars about their economic indicators.:)

If economic indicators are highly going to shake the price action, the foreign exchange market becomes more challenging and has great potential on profit booking. Since a currency is a proxy for the country it represents, the economic health of that country is priced into the currency.

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So now it is easy to predict the relevancy of economic indicators and their impact on the currency trading. πŸ™‚

We can also conclude that these key factors also are the concern area of currency market to derive the desirable profit.