© 1st Forex Trading Academy 2004
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How to read and interpret a weekly economic calendar
Consumer
sentiment
– Survey of consumer attitudes concerning both the present situation as
well as expectations regarding economic conditions conducted by the University of Michigan.
Five hundred consumers are surveyed each month. The level of consumer sentiment is directly
related to the strength of consumer spending. Consumer spending accounts for two-thirds of the
economy, so the markets are always dying to know what consumers are up to and how they might
behave in the near future. The more confident consumers are about the economy and their own
personal finances, the more likely they are to spend. With this in mind, it’s easy to see how the
index of consumer attitudes gives insight to the direction of the economy. Changes in consumer
sentiment and retail sales don’t move in tandem month by month.
Consumer Price Index (CPI)
– Measure of the average price level of a fixed basket of goods and
services purchased by consumers. Monthly changes in the CPI represent the rate of inflation. The
CPI is the most followed indicator of inflation in the United States. Inflation is a general increase
in the price of goods and services. The relationship between inflation and interest rates is the key
to understanding how data like the CPI influence the markets. By tracking the trends in inflation,
whether high or low, rising or falling, investors can anticipate how different types of investments
will perform.
Current account
– Measure of the country’s international trade balance in goods, services and
unilateral transfers. The level of the current account, as well as the trends in exports and imports,
are followed as indicators of trends in foreign trade. U.S. trade with foreign countries hold important
clues to economic trends here and abroad. The data can directly impact all the financial markets,
but especially the foreign exchange value of the dollar.
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