Simply Junior

Currencies do not become weaker or stronger randomly. A large portion of a currency’s value is based on consumer confidence based upon the economic strength of the country. Economic strength is determined by certain key factors. These factors are closely watched in FX trading market. When these economic indicators change and the value of a currency will fluctuate accordingly. A countries currency represents the economic health of that country and the price is reflective in its currency.

Fundamental economic factors have become increasingly important market movers. When focusing on the impact that economic numbers have on price in the FX market there are 5 top indicators to watch. These indicators that we are about to discuss have a strong effect to generate volume and to move prices in the market.

Economic News Impacts The Short-Term Trading and The Long-Term.

The data itself is not as important as whether or not it falls within market expectations. Besides knowing when all the data is released, it is vitally important to know what economists are forecasting for each indicator. For example, knowing the economic consequences of an unexpected monthly rise in the Consumer Price Index. The actual, is not nearly as vital to your short-term trading decisions as it is to know that this month the market was looking for CPI to fall.

Analyzing the longer-term ramifications of an unexpected monthly rise in prices can wait until after you’ve taken advantage of the short term trading opportunities. Market expectations for all economic factors are public knowledge. You should be tracking these economic data indicators on an economic or forex calendar.

1.Payroll \ Unemployment

Strong job creation is a good indication of economic growth, as companies must increase their workforce in order to meet demand The unemployment rate is also a good measure of the strength of the labor market. One of the ways analysts gauge the strength of an economy is by the number of jobs created, and the percentage of workers unable to find jobs.

2. The Discount Rate \ FOMC Interest Rate Decisions

The Federal Open Market sets the discount rate, which is the rate at which the Federal Reserve Bank charges member banks for overnight loans. The rate is set during the FOMC meetings by the regional banks and the Federal Reserve Board. Lets take a further look at these two factors.

The discount rate is an interest rate a central bank charges depository institutions that borrow reserves from it. For example, the German Bundesbank offered a discount rate up to 1999 until interest rate policy was transferred to the European Central Bank. A depository institution is a financial institution in the United States, such as a savings bank, that is legally allowed to accept monetary deposits from consumers. Federal depository institutions are regulated by the Federal Deposit Insurance Corporation (FDIC). An example of a non-depository institution might be a mortgage bank. While licensed to lend, they cannot accept deposits.

The Federal Open Market Committee (FOMC), a component of the Federal Reserve System, is charged under U.S. law with overseeing open market operations in the United States, and is the principal tool of US national monetary policy(Open market operations are the buying and selling of government securities.) The Committee sets monetary policy by specifying the short-term objective for those operations, which is currently a target level for the federal funds rate (the rate that commercial banks charge on overnight loans among themselves). The FOMC also directs operations undertaken by the Federal Reserve System in foreign exchange markets, although any intervention in foreign exchange markets is coordinated with the U.S. Treasury, which has responsibility for formulating U.S. policies regarding the exchange value of the dollar.

There are 8 meetings scheduled per year. The dates are known in advance so mark them on your economic calendar and incorporate them into your forex trading strategies.

3. Trade Balance

The balance of trade measures the difference between the value of goods and services that a nation exports and the value of goods and services that it imports. A trade surplus results if the value of exported goods exceeds that of imported goods, whereas a trade deficit exists if imported goods exceed exported goods.

Generally this information is released around the middle of the second month following the reporting period. Again this should be apart of your trading strategies.

4. CPI – Consumer Price Index

The CPI is a key gauge of inflation, as it measures the price of a fixed group of consumer goods. Higher prices are considered negative for an economy, but since central banks often respond to price inflation by raising interest rates, currencies sometimes respond positively to reports of higher inflation. Below is a further explanation of CPI.

A consumer price index (CPI) is a measure of the average price of consumer goods and services purchased by households. It is one of several price indices calculated by national statistical agencies. The percent change in the CPI is a measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices. The CPI is, along with the population census and the National Income and Product Accounts, one of the most closely watched national economic statistics. This information is released monthly.

5. Retail Sales

Retail sales is a measure of the total goods sold by a sampling of retail stores. It is used as a gauge of consumer activity and confidence as higher sales figures would indicate increased economic activity.

The last two years have been extremely challenging and small business owners are looking forward to 2011 with a sense of excitement and optimism. All signs are pointing to an improving economy and consumer confidence is beginning to move in a positive direction. To assist you in preparing for a successful new year, we have put together the following list of ten tasks you should complete between now and the end of the year.

Management and Financial

Pull out the old business plan and review where you are relative to the goals you set at the end of last year: (revenue, profit, number of customers, assets, owners’ equity, debt). To get these numbers you should review your Balance Sheet, your Income Statement and your Cash Flow Statement. Collect all of the receipts especially those in the shoe box or in the glove compartment. Make sure they are inputted into your accounting system. Look at your accounts receivable and call those customers who owe you money and demand payment. Times are tough and everyone is slow paying. Those who ask get moved to the top of the pile. Check leases to make sure you know when they are due to expire and renegotiate them in a timely fashion. Take a physical inventory of your products and compare with the entries in your accounting system and make any necessary adjustments.

Marketing

Understand who your favorite customer is and review your marketing message and make sure that it addresses their needs and is written using the words that they, the customers, use. Tune up your elevator pitch and make sure that all your employees learn it by heart. Check your web site content and make sure it communicates your marketing message. Also check your copyright notice and contact information for correctness. Make sure your Twitter, Facebook and other social media site names/profiles represent your company name. Register your company with Google Local, Yahoo Local and Bing Local. Check to see that you show up on map searches.

Now that you’ve done the above, start your planning for next year. Set the goals and objectives for the next 4 quarters and prepare action plans and designate responsible individuals in your company. Remember, you should be reviewing your business plan continually.

Britain, the USA and many other countries are in the grip of one of the worst recessions for many years. Some predict that things will become even worse before the economies of each country pick up and start to grow again. A few economists are suggesting that we may be heading for a depression. What can we all do to lessen the financial impact of these times on our families and ourselves?

What follows assumes you are fortunate to remain in gainful employment. If you are one of the unlucky ones and you lose your job then the second part of this article will probably not apply to you. Surviving redundancy will be the subject of a follow up article.

What’s the difference between a recession and a depression?

This is a difficult question to answer because economists and other financial analysts don’t seem to be able to agree, but the standard definition of a recession is when the GDP (Gross Domestic Product retracts i.e. ceases to grow and starts to decrease, and when that has happened for two consecutive quarters then the economy is deemed to be in recession. However, some analysts consider this definition to be too vague as it doesn’t take into account several important variables like consumer confidence, population growth, unemployment, and inaccurate statistics.

If an economy continues to shrink (recess) for much more than six months e.g. a year or longer, and the GDP falls by more than about 5% then most would agree that it is in a depression, but these are rare and occur probably only once or twice during a century. The main thing that defines the difference between the two is confidence; consumer confidence and the confidence of the banks. So whatever your opinion on the current state of affairs, how can you not only survive it, but make the best of things while it lasts?

Money Saving Tips

Take a long hard look at your finances and identify any areas of waste. Do you really need all those magazine subscriptions? Are you shopping and spending wisely? What direct debits and standing orders go out of your account each month? Clear the clutter in your house. Sort out your garage, loft and shed and consider selling, swapping, giving away, or throwing away anything you haven’t used for many months. We all like to store things ‘just in case it comes in handy one day’ but our homes packed with these unused items. They depreciate in value over time so if it’s not going to be used, get rid of it and you might make some money in the process. Grow some food at home. It’s surprisingly easy to grow even just a little food at home. You don’t need a large garden and years of experience. You can grow tomatoes and runner beans in small boxes or grow bags in a space no bigger than a small sofa. Herbs can be grown in window boxes. Obviously the larger the garden, the more options you have. Vegetables and one or two fruit trees can be grown in most urban gardens. There’s nothing more satisfying that seeing home grown produce on your plate and somehow it tastes better! Learn to barter and trade with neighbours and online. If you’ve cleared out the clutter (see above) you’ll probably have a few things to sell, but you could also swap them for things you do need (e.g. for your new vegetable plot), or for services that you might otherwise have to pay for. For example, if your neighbour is a plumber who needs a lawn mower offer him your spare mower in return for fixing something in your house. If you have some skills of your own offer them in return for something you need. Not only will you save some money but you will also be encouraging the growth of community spirits and that’s something that has been lost in many parts of our societies.
Spending Money Wisely

We may need to save money but we still need to shop for all the essential items for our families, homes, and our pets. We still need to feed and clothe ourselves and to keep our homes running and in good repair. Then there are birthdays, Christmas, and other seasonal holidays, not to mention vacations at home or abroad. However much cash we do have to spend we not only need to spend it on essentials and the occasional treats, but we should also keep spending in order to feed the economy. We need to spend more carefully and wisely, not stop spending altogether. Businesses large and small depend on us to keep them alive, and if the businesses fail then more jobs will be lost and the cycle will continue.

The best way to save money on everything you buy for house and home is to make use of a shopping discount voucher code site. For example, Voucher-Discounts.co.uk lists thousands of discount voucher codes for hundreds of high street and online retailers. These e-coupons or shopping vouchers are an essential tool for the careful shopper. Visit the site and bookmark it, then return and check for new vouchers each and every time you are considering not only shopping online but also a visit to the shops in the high street. The site may also publish vouchers that you can print off in order to receive discounts in restaurants as well as in shops.

Remember, if you remain in employment or continue running your business during a recession, by all means cut costs and waste, but don’t stop spending altogether. Businesses need customers to survive, and they need to survive to keep people in work, so keep spending but spend wisely.

Copyright 2009 Ben Lovegrove

Real estate bubble talk seems to be the most prevalent question I’m asked by the national media, be it print, online, or TV. The problem is that the market national real estate is comprised of thousands of micro-markets and making a sweeping generalization about the status of residential real estate in the United States doesn’t serve anyone. After all would these journalists want their own home price deflated based on some broad market hype? I don’t think so. Here are some common questions with my response.

Is it a buyers market?

Nash: Buyers have more weight in the market then they have had in the last five years, but the market is balanced and doesn’t favor either buyers or sellers.

Do you think there is excess inventory of unsold homes?

Nash: The supply of resale homes is certainly up and the number of new construction condos is staggering. Most markets have been vacillating between warm and cool in 2006, so I am waiting for the prospect of pent-up buyer demand to turn into sales before making any forecasts, which everyone is waiting for. It’s not easy to read the market at this point in time.

What about 2007?

2007 should be a consistent year sales wise for real estate. People have to remember that housing is also shelter and does not exactly mirror the stock market. People need to live somewhere. Consumer confidence is on the rise, and with energy prices falling, home buyers that have stayed on the sidelines, should make a purchase in 2007.

What about the new Option ARM mortgages?

These mortgages are not so new, but being peddled today to home buyers that probably are over-borrowing if they need an Option ARM. Consumers should know that these loans include negative amortization, which is not in their short or long term financial interest.

Are incentives going to motivate buyers to sign contracts?

Nash: In new construction they are quite common, and do motivate buyers, but many buyers have told me for years that they feel incentives are factored into sales prices, or that prices are raised to include the price of the incentive. In existing homes, incentives are trying to break in to the process, but are being met by buyers with resistance. Most buyers want to cut to the chase and get the lowest price. One exception is flat-screen televisions, they can entice many buyers, especially men.

Seller concessions on resale homes appear to be the buzzword for 2006.

Nash: We are seeing home sellers be much more flexible in 2006 on repairing or crediting buyers for inspection issues. Also they are more likely to help with closing costs. But, they are not giving much on price.

When is your annual report on “What’s In, What’s Out with Homebuyers in 2007″ released?

Nash: The second week of December. It has some interesting new trends that are the result of the correcting market in 2006.

How can home buyers, sellers or real estate agents participate in the survey that is part of the report?

Nash: They can visit my website: http://www.1001realestatetips.com, click on “For Agents” and register.