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Economic Indicators: Purchasing Managers Index (PMI)
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Welcome back traders!
If you like to trade Economic News Events, you will know that one of the most prevalent market movers is a country’s Purchasing Managers Index or PMI.
The data is compiled by surveys of literally hundreds of Purchasing Managers (the company executives who purchase goods and services for their respective organizations) and the surveys cover a wide variety of aspects.
They ask whether the situation is better, worse, or has not changed since the last survey.
Basically, if companies are purchasing more, it is a positive sign for the economy.
On the contrary, if they are purchasing less, it can be a negative sign.
A figure of 50 indicates no change from the last survey, above 50 indicates expansion of business, and a figure below 50 indicates contraction.
Regarding the figures on the Economic Calendar, like any news data, if the figure is higher than analysts’ predictions, that will be positive for that economy’s currency.
Of course, if the figure is lower, that will be negative for the economy’s currency.
The surveys ask about:
Employment
Production
New Orders
Prices
Supplier Deliveries
And
Inventories
Just like any news event, PMIs can provide us with trading opportunities if counter-trend moves in price action react with support, resistance or a trend line.
We can then take advantage of the reversal and enter the market with the current trend.
Each Key economy announces PMIs every month and are usually segregated into Manufacturing and Non-Manufacturing (or Services).
Most of the PMIs that we see displayed on our Economic Calendar are done by an independent company called Markit, who specialise in this type of economic data.
US PMI figures are provided by Markit and the Institute for Supply Management and Canadian figures are provided by Ivey.
The Eurozone also announces its PMIs but you will also see figures from France and Germany as the largest European economies.
That’s all for now. Happy trading with Valutrades and we will see you soon.
CFDs and FX are leveraged products and your capital may be at risk.
If you like to trade Economic News Events, you will know that one of the most prevalent market movers is a country’s Purchasing Managers Index or PMI.
The data is compiled by surveys of literally hundreds of Purchasing Managers (the company executives who purchase goods and services for their respective organizations) and the surveys cover a wide variety of aspects.
They ask whether the situation is better, worse, or has not changed since the last survey.
Basically, if companies are purchasing more, it is a positive sign for the economy.
On the contrary, if they are purchasing less, it can be a negative sign.
A figure of 50 indicates no change from the last survey, above 50 indicates expansion of business, and a figure below 50 indicates contraction.
Regarding the figures on the Economic Calendar, like any news data, if the figure is higher than analysts’ predictions, that will be positive for that economy’s currency.
Of course, if the figure is lower, that will be negative for the economy’s currency.
The surveys ask about:
Employment
Production
New Orders
Prices
Supplier Deliveries
And
Inventories
Just like any news event, PMIs can provide us with trading opportunities if counter-trend moves in price action react with support, resistance or a trend line.
We can then take advantage of the reversal and enter the market with the current trend.
Each Key economy announces PMIs every month and are usually segregated into Manufacturing and Non-Manufacturing (or Services).
Most of the PMIs that we see displayed on our Economic Calendar are done by an independent company called Markit, who specialise in this type of economic data.
US PMI figures are provided by Markit and the Institute for Supply Management and Canadian figures are provided by Ivey.
The Eurozone also announces its PMIs but you will also see figures from France and Germany as the largest European economies.
That’s all for now. Happy trading with Valutrades and we will see you soon.
CFDs and FX are leveraged products and your capital may be at risk.
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