Understanding the cycle of a country's economic fundamentals
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Thread: Understanding the cycle of a country's economic fundamentals

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    Lightbulb Understanding the cycle of a country's economic fundamentals

    In many post, I always press on my post that market always be moved by fundamental, technical analysis is useless if there is no fundamental. It is better to understand the whole economic fundamental by try to understanding the macroeconomics. By having an understanding of the causal relationship of the indicators of a country's economic indicators, we can see a complete picture of the economy. Understanding the cycle of a country's macroeconomic fundamentals help us to predict the interest of investors / traders to invest their funds in an economic region
    example:
    Rising unemployment could reduce the purchasing power of the people, on the other hand the decline in private consumption also means the decline in demand for both goods and services that result in lower prices and so on
    Let us discuss the cycle of economic fundamentals that I have outlined

    how do you print screen
    1. Look carefully at the picture above
    2. Observe the history data of the previous month indicator. Focus on one full month of data (date 1-30)
    3. Record the results of economic data indicators on the image cycles
    4. On that note the green color in the event of an increase / strengthening and mark in red if there is a decrease / weakening
    5. Once all the data is complete then do analysis linkages between these macro economic data. Do not forget to make it in the form of a resume analysis
    6. The more practice you will more easily understand the macro-economy that occurred in the forex market
    7. Once you are familiar with Macroeconomic Fundamentals cycle analysis of a modern state, then you can perform the analysis in the next month

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    Before continuing to comprehend the understanding of Fundamental Economic Cycles. It is better to us understand the meaning of these Fundamental Indicator
    Production Activity
    ISM SUrvey
    Previously known as the NAPM, effectively changed since January 2002.
    ISM is an important survey on US manufacturing activity conducted by the Institute for Supply Management (ISM). Reports are usually issued on the first working day of each month, providing a detailed view of the beginning of the manufacturing sector before the issuance of any other employment report.
    This survey is known with accuracy timeliness (period) it, the breadth of information available, and the numbers listed on its headline is a function of six major components: payment of the price, new orders, supplier deliveries, production, inventory, and employment. It should be noted, third last component reflects the power supply (supply), while the three previous components reflect
    strength of demand (demand).
    It can be seen how the relative trends between the two groups (supply and demand) illustrates the balance between the two forces, and this provides a view of the policies of the Federal Reserve.
    Components payment price (Price Paid) is widely considered because this component involves elements of price pressures in the sector, the number 50 or more indicates that the sector is growing, while a reading below 50 indicates the shrinkage.

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    Production Activity
    There are three types of Industrial Production
    1. Industrial Production
    Industrial Production is a monthly data that measures the total output of the entire plant, mining, and public service companies (electricity, water, gas, transportation, etc.).
    Manufacturing Production, the largest component of the data Industrial Production, can be accurately predicted from the total hours worked from the employment report. One of the biggest disadvantages of this data is the inclusion of component production level of public services that can be greatly affected by the change (eg climate change).
    Increase exceeded the estimates of this indicator is defined as an increase in the rate of inflation, which in turn will cause a decline in bond prices and rising interest rates.

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    Production Activity
    2. Industrial Production and Capacity Utilization
    Industrial Production is a monthly data that measures the total output of the entire plant, mining, and public service companies (electricity, water, gas, transportation, etc.). Manufacturing Production, the largest component of the data Industrial
    Production, can be accurately predicted from the total hours worked from the employment report. One of the biggest disadvantages of this data is the inclusion of component production level of public services that can be greatly affected by the change (eg climate change).
    While Capacity Utilization is the complement of the data Industrial Production. Capacity Utilization calculate the level of use of the state capital used in the production process. These data up and down in line with the business cycle. rising levels
    production will cause a rise also this data. However, very high level of difficulty in compiling this data led to the market less trusting Improved accuracy rate that exceeds the estimate of this indicator is defined as the increase in the rate of inflation, which in turn will cause a decline in bond prices and rising interest rates.

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    Production Activity
    3. Industrial Production and Manufacturing Production
    Industrial Production is a monthly data that measures the total output of the entire plant, mining, and public service companies (electricity, water, gas, transportation, etc.). Manufacturing Production, the largest component of the data Industrial
    Production, can be accurately predicted from the total hours worked from the employment report. One of the biggest disadvantages of this data is the inclusion of component production level of public services that can be greatly affected by the change (eg climate change). Increase exceeded the estimates of this indicator is defined as an increase in the rate of inflation, which in turn will
    cause a decrease in bond prices and rising interest rates.

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    Production Activity
    CBI Survey
    Organization of the biggest employers in the UK, focusing on creating maintain ideal conditions for optimum competition and prosperity for all. CBI survey published each month and four months of the assessment in the service sector and manufacturing past, current, and future. The resulting index shows the respondents' views on various things such as output, sales, pricing, investment, and demand for exports / imports.

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    Production Activity
    Chicago PMI (Purchasing Managers' Index)
    A PMI data from Chicago and the surrounding area. The scope of the survey includes both industry-sectors, as well as non-industrial sector (which is rarely recognized by market participants).
    PMI is a composite index of the five main indicators, which includes the following elements: Order, Level Inventory, Production, Delivery, and Labor.
    Figures index above 50 means the business sector experienced expansion, below 50 means contraction. This index is considered as an important indicator and is considered the best indicator to measure the activity of production. This index can also detect inflation and industrial activity.

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    Production Activity
    Philadelphia Fed Index (Business Outlook Survey)
    Is a monthly survey to the industrialists in the area around the state of Pennsylvania, New Jersey and Delaware. The company surveyed indicate a change in all business activities and their wide range of industrial activities. Asked include labor, working hours, orders, inventory
    goods, shipping, payments and receipts.
    The index number above zero means expansion and contraction when below zero.

    This data is considered as a good indicator of changes in all matters relating to the industry. Assessed accurately reflects the current conditions. However, as it only covers three states, less able to describe the condition of the country as a whole.

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    Production Activity
    Productivity
    Measuring changes in the amount of goods and services produced per unit. Combining labor and capital inputs. Unit price of labor component is a useful indicator for measuring the pressure on wages. The importance of productivity has grown the last few years since the Federal Reserve has started to pay attention to the development trend and the rate of inflation.

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    Production Activity
    Industrial Production and Capacity Utilization
    Industrial Production is a monthly data that measures the total output of the entire plant, mining, and public service companies (electricity, water, gas, transportation, etc.). Manufacturing Production, the largest component of the data Industrial
    Production, can be accurately predicted from the total hours worked from the employment report. One of the biggest disadvantages of this data is the inclusion of component production level of public services that can be greatly affected by the change (eg climate change).
    While Capacity Utilization is the complement of the data Industrial Production. Capacity Utilization calculate the level of use of the state capital used in the production process. These data up and down in line with the business cycle. rising levels
    production will cause a rise also this data. However, very high level of difficulty in compiling this data led to the market less trusting Improved accuracy rate that exceeds the estimate of this indicator is defined as the increase in the rate of inflation, which in turn will cause a decline in bond prices and rising interest rates.

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