Forex Tips & Daily Analysis

Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling are expected to annouce an economic stimulus package intended to boost the housing market.

Bank of Japan (BOJ) Governor Masaaki Shirakawa will hold a press conference in Tokyo following the Monetary Policy Committee (MPC) interest rate announcement. The MPC's announcement is void of commentary, so traders look to Shirakawa's press conference for clues on future monetary policy action. Heavy market volatility is sometimes experienced during this press conference as traders attempt to decipher Shirakawa's clues. As head of the central bank's governing body, which is responsible for setting the nation's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.

Measures the number of new construction intentions. This data is a leading indicator for the construction industry since the issuance of a building permit is one of the first steps in the construction process.

Measures interest rate for overnight money market deposits. Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future.

The Central Bank Governing Council releases an Interest Rate Statement each month. The statement contains the latest decision regarding changes to the countries short term interest rate ("minimum bid rate"). A rising trend has a positive effect on the nation's currency. Short term interest rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. What makes interest rates so important is that high rates attract foreigners looking for the best "risk-free" return on their money, which significantly increases demand for the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down. This is what makes inflation-predicting indicators so important. Traders know that rising prices will lead the central bank to raise interest rates, which ultimately leads to a more valuable currency.

Measures Change in the price of goods and services purchased by consumers; Usual Effect Actual > Forecast = Good for currency; Frequency Released monthly, about 15 days after the month ends; FF Notes The 'Previous' listed is the 'Actual' from the CPI Flash Estimate and therefore the 'History' data will appear unconnected. This is considered the Eurozone's most important inflation data because it's used as the central bank's inflation target, but it tends to have a relatively mild impact as the CPI Flash Estimate and German Prelim CPI are released about 15 days earlier; Why Traders Care Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate; Acronyms Consumer Price Index (CPI);

Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation's currency. GDP is the broadest measure of activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation's currency.

Bank of Japan (BOJ) Governor Masaaki Shirakawa will hold a press conference in Tokyo following the Monetary Policy Committee (MPC) interest rate announcement. The MPC's announcement is void of commentary, so traders look to Shirakawa's press conference for clues on future monetary policy action. Heavy market volatility is sometimes experienced during this press conference as traders attempt to decipher Shirakawa's clues. As head of the central bank's governing body, which is responsible for setting the nation's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.

The Chartered Institute of Purchasing and Supply (CIPS) Construction Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the construction sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

The Producer Price Index (PPI) measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. When manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation. PPI is highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart.

Measures the monthly change in value of new construction projects

Measures Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry; Usual Effect Actual > Forecast = Good for currency; Frequency Released monthly, on the first business day after the month ends; Next Release Oct 1, 2008 FF Notes Above 50.0 indicates industry expansion, below indicates contraction; Why Traders Care It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy; Derived Via Survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories; Also Called Manufacturing ISM Report On Business; Acronyms The Institute for Supply Management (ISM), Purchasing Managers' Index (PMI);

The Institute of Supply Management (ISM) Manufacturing Prices measures the monthly inflation experienced by manufacturing organizations when purchasing materials and services. The ISM surveys 400 firms to produce this index

Due to deliver a speech titled "Monetary Policy between Inflation and Growth" at the Swiss Venture Club, in Bern. SNB Governing Board members are responsible for setting the nation's key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.

Level of a composite index based on surveyed consumers;

It measures the level of a diffusion index based on surveyed service-based companies.