the prospects of the economy, these two reports should be featured in any leading economic indicators list. Dollar relative to other national currencies since such trends tend to favor those currencies with higher real interest rates. Benchmark interest rates since policymakers will see the.S. If factories are running close to their maximum capacity, machines are likely to fail as a result of being overworked. Other personal services such as beauty care, financial services, funeral expenses, and tobacco and smoking products. This outcome will tend to cause the value of the.S. Because inflation feeds into monetary policy so directly, the CPI report can have a high impact on prices in the bond, FX, and stock markets. Dollar in its various exchange rates, and forex traders will typically buy the.S. At the time of writing, the FED used 2007 as its base period.
Forex traders consider the, cPI and Core, cPI figures to be two of the most fundamental indicators for the performance of an economy. Among the two, however, the Core CPI figure provides a better look under the hood by excluding costs in the energy and food sectors. A CPI number that comes out more or less in line with the markets consensus should have little impact on the forex markets valuation for the.S.
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This means that any strong divergence from expectations are likely to have a big impact on Forex and stock markets. All three have their uses and may impact the Forex market in different ways. A key fundamental that drives Forex rates is forex time frames the level of interest rates in the two countries involved, and the expectations regarding those interest rates. In terms of the effect on the Forex market, it is a similar story for the US Dollar as it is for stocks: a strong report is bullish for USD, as a burgeoning economy would tend to lean towards a tighter bias in monetary policy. It is a closely-followed report and has the potential to send perturbations through market prices, especially if there is a big divergence between the reported figure, and Wall Street expectations. The reason it's so closely followed is because the report has a tendency to move Forex markets substantially.
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