Important Economic Indicators Affecting the USD

Important Economic Indicators Affecting the USD
By [http://ezinearticles.com/?expert=Alfrick_Opidi]Alfrick Opidi

Most currencies in the world are mostly traded against the US dollar more than any other currency in the world.

For this reason, the fundamental factors that affect the value of the USD are of high interest to Forex traders and many other kinds of traders around the globe. Some of the macro indicators with a high impact on the value of the USD include:

Consumer Confidence Index (CCI)

Sampling about 5,000 households, the CCI survey is an accurate indicator of consumer confidence. Consumer consumption is the biggest market mover of the US economy and as such has a big impact on Federal Reserve interest rates.

Consumer Price Index (CPI)

Released by the Bureau of Labor and Statistics around the 20th of every month, the CPI is considered as a strong measure of inflation levels. It is also considered a strong indicator of government policy effectiveness.

Gross Domestic Product (GDP)

The US Bureau of Economic Analysis produces a GDP report every last day of each quarter. The GDP is a measure of productivity, consumption, government expenditure, and trade balance among other key economic factors.

Non-Farm Payrolls (NFP)

Released monthly by the Department of Labor, this is a report that represents the changes in numbers of employed and paid US workers in various market sectors. The report does not cover government employees, employees of non-profit organizations, farm employees, and employees of private households. The NFP draws its importance from the fact that non-farm workers produce almost the entire US GDP.

Purchasing Managers Index (PMI)

The PMI measures manufacturing trends. An index above 50 indicates a growth in manufacturing and a possible growth in the value of the USD. An index below 50 represents a decrease in manufacturing and possible loss of dollar value.

Federal Open Market Committee (FOMC) Meeting

This meeting is important as it sets the prime interest rate. The 12 Fed regions each send a representative 8 times a year for discussions on the management of the fiscal and monetary policy of the US government. The resolutions of the FOMC and subsequent announcements have a direct and instant impact on the value of the dollar.

Institute for Supply Management (ISM) Manufacturing Index

By surveying about 400 top purchasing executives of industrial companies, this index is a reflection of manufacturing trends. It measures employment, supply, and demand in manufacturing and an index over 50 indicates an increase in economic activity and a possible strengthening of the dollar.

Michigan Consumer Confidence Index (MCSI)

This is an economic indicator representing current and future consumer spending trends. A growth in consumer spending is an indicator of growing investor confidence and possible dollar strengthening.

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