The Retail Sales Index measures the total value goods and services sold each month at retail outlets. A rising trend has a positive effect on the nation's currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises. The headline is the monthly and annual percentage change in retail sales.
A countrys trade balance reflects the difference between exports and imports of goods and services. The trade balance is one of the biggest components of the Balance of Payment, giving valuable insight into pressures on countrys currency. A positive Trade Balance (surplus) indicates that exports are greater than imports. When imports exceed exports, the country experiences a trade deficit. Because foreign goods are usually purchased using foreign currency, trade deficits usually reflect currency leaking out of the country. Such currency outflows may lead to a natural depreciation unless countered by comparable capital inflows (inflows in the form of investments, FDI - where foreigners investing in local equity, bond or real estates markets). At a bare minimum, deficits fundamentally weigh down the value of the currency.
Sentix Investor Confidence measures investor confidence towards the Euro-zone economy. A rising trend has a positive effect on the nation's currency because it suggest that funds are more likely to invest in European securities, which tends to strengthen the economy.
The main monetary policy instrument takes the form of repo tenders. The CNB accepts surplus liquidity from banks and in return transfers eligible securities to them as collateral. The two parties agree to reverse the transaction at a future point in time, when the CNB as borrower repays the principal of the loan plus interest and the creditor bank returns the collateral to the CNB. The basic duration of these operations is 14 days; the two-week repo rate (2W repo rate) is therefore considered to be of key importance in terms of monetary policy.
The Overnight Call Rate is the interest rate at which the BOJ rediscounts bills and extends loans to financial institutions. The Bank of Japan Policy Board meets once a month for two days to discuss economic developments inside and outside of the country. The culmination of the meeting is the announcement of any adjustments to interest rates or other aspects of monetary policy. Changes in the rate have far-reaching consequences, affecting consumer loans, mortgages, bonds and the exchange rate of the Yen. The statement is the Bank of Japan's collective outlook on the economy as well as a source for clues on future monetary policy decisions. When it comes to interest rates, the future direction of rates is usually far more important than its current rate.
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Currency Relation
Ever wondered what happens when
the Dollar slides against the Euro?
Will the Pound fall too or stay the same?
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