WHAT MOVES THE MARKET

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There are data out there that moves currencies, but these are in relation to expectations for future interest rate decisions.

INFLATION

Inflation and inflation expectations drive central bank decisions as their chief policy mandate is to maintain price stability. In the case of major developed central banks, including the ECB and Bank of England, inflation is targeted at or just below 2%. Interest rates are the prime tool central banks have to modify inflation and they will tend to raise interest rates if inflation is seen as rising too quickly; and reduce them when inflation is running below target. Consumer price inflation (CPI) is usually the main index, but producer price inflation figures are also watched as a leading indicator.

CONSUMER SPENDING

Consumer spending is a barometer of confidence in an economy and often seen as a leading indicator for inflation.

JOBS

Employment figures are usually a factor in the forex markets as they indicate the relative strength or weakness of a particular economy – and therefore its potential future interest rate path. The monthly US non-farm payrolls report is among the most closely-watched.

GDP

GDP figures provide an overall health check of an economy. These are usually lagging indicators but surprises will affect forex markets.

PMI

Every month the manufacturing, construction and services sectors of major economies are surveyed. The reading is detailed in a purchasing managers’ index (PMI), which are viewed as important indicators for an economy.