A. Gross domestic product
The meaning of (1) GDP
Gross domestic product (GDP) refers to the value of all final products and services produced by a country or region's economy in a certain period (a quarter or a year), and is generally recognized as the best indicator to measure a country's economic situation. It can not only reflect a country's economic performance, but also its national strength and wealth. Generally speaking, GDP has four different components, including consumption, private investment, government expenditure and net exports. Expressed as:
GDP: C+I+C+X, where: C is consumption, I is private investment, C is government expenditure, and X is net export.
Whether the economy of a country or region is in a growth stage or a recession stage can be observed from the change of this figure. Generally speaking, there are two forms of GDP announcement, with the total amount and percentage rate as the calculation unit. When the GDP growth figure is positive, it shows that the region's economy is in the expansion stage; On the other hand, if it is negative, it means that the region's economy has entered a recession. Because GDP refers to the total amount of goods and services produced in a certain period multiplied by "money price" or "market price", it is nominal GDP. Nominal GDP growth rate is equal to the sum of real GDP growth rate and inflation rate. Therefore, even if the total output does not increase, the nominal GDP will rise only if the price level rises. In the case of rising prices, the rise of GDP is only an illusion. However, what really matters is the rate of change of real GDP. Therefore, when using this indicator, the nominal GDP must be adjusted through the GDP contraction index, so as to accurately reflect the actual changes in output. Therefore, the increase of GDP contraction index in a quarter is enough to explain the inflation situation in that quarter. If the GDP contraction index is greatly increased, it will have a negative impact on the economy, and it is also a harbinger of tight money supply, rising interest rates and then rising foreign exchange rates.
(2) Interpretation of GDP
The substantial growth of a country's GDP reflects the vigorous development of the country's economy, the increase of national income and the subsequent improvement of consumption power. In this case, the central bank may raise interest rates and tighten the money supply. The good performance of the national economy and the rise in interest rates will increase the attractiveness of the country's currency. On the other hand, if a country's GDP shows negative growth, it means that the country's economy is in recession and its consumption capacity is reduced. At that time, the central bank may cut interest rates again to stimulate economic growth. Falling interest rates and sluggish economic performance will reduce the attractiveness of the country's currency. Therefore, generally speaking, high economic growth rate will promote the rise of the country's currency exchange rate, while low economic growth rate will cause the decline of the country's currency exchange rate. For example, 1995- 1999, the average annual GDP growth rate of the United States is 4. 1%, while the GDP growth rates of major countries such as France, Germany and Italy are only 2.2% and 65,438, except Ireland (9.0%). This has prompted the euro to fall against the US dollar since it was launched in June 1 999+1October1,with a depreciation of 30% in less than two years. But in fact, the difference of economic growth rate has many effects on exchange rate changes:
First of all, a country's high economic growth rate means an increase in income and domestic demand, which will increase the country's imports and lead to a current account deficit, which will lead to a decline in its currency exchange rate.
Second, if the country's economy is export-oriented, economic growth is to produce more export products, and the growth of exports will make up for the increase in imports and ease the downward pressure on the exchange rate of its currency.
Third, a country's high economic growth rate means a rapid increase in labor productivity, and cost reduction improves the competitive position of domestic products, which is conducive to increasing exports and curbing imports. Moreover, the high economic growth rate makes the country's currency optimistic in the foreign exchange market, so the country's currency exchange rate will have an upward trend.
In the United States, the Ministry of Commerce is responsible for the analysis and statistics of GDP, which is usually estimated and counted once every quarter. After each preliminary estimate is published, there will be two revisions (the first revision &; The final revision), mainly published in the third week of each month. Gross domestic product (GDP) is usually used for comparison with the same period last year. If it increases, it means that the economy is relatively fast, which is conducive to the appreciation of its currency. If it is reduced, it means that the economy is slowing down and its currency is facing depreciation pressure. In the United States, GDP growth of 3% is an ideal level, indicating that the economy is developing healthily. Above this level, there is inflationary pressure. Growth below 1.5% indicates signs of economic slowdown and gradual recession.
B. Interest rate
The meaning of (1) interest rate
Interest rate, in terms of its manifestation, refers to the ratio of interest amount to total loan capital in a certain period of time. For many years, economists have been trying to find a set of theories that can fully explain the structure and changes of interest rates. The "classical school" believes that interest rate is the price of capital, and the supply and demand of capital determines the change of interest rate. Keynes regarded interest rate as "the price of using money". Marx believes that interest rate is a part of surplus value and a manifestation of loan capitalists participating in surplus value distribution. Interest rates are usually controlled by the national central bank and managed by the US Federal Reserve. Now, all countries regard interest rate as one of the important tools of macro-control. When the economy is overheated and inflation rises, it will raise interest rates and tighten credit; When the economy is overheated and inflation is controlled, interest rates will be lowered appropriately. Therefore, interest rate is one of the important basic economic factors.
(2) Interpretation of interest rate
The level of interest rate has a very important influence on the foreign exchange rate, and interest rate is the most important factor affecting the exchange rate. We know that the exchange rate is the relative price between the currencies of two countries. Like the pricing mechanism of other commodities, it is determined by the relationship between supply and demand in the foreign exchange market. Foreign exchange is a financial asset, and people hold it because it will bring capital theft. When people choose to hold their own currency or foreign borrowed currency, they first consider which currency can bring them greater benefits, and the yield of each country's currency is first measured by the interest rate in its financial market. If the interest rate of a currency rises, the interest income from holding the currency will increase, attracting investors to buy the currency, thus helping to support the currency; If the interest rate falls, the income from holding money will decrease, and the attractiveness of money will weaken. So it can be said that "the interest rate rises and the currency strengthens; Interest rates are falling, soft money. "
From an economic point of view, when the foreign exchange market is balanced, the income from holding any two currencies should be equal, that is, Ri=Rj (interest rate parity condition). Here R stands for the rate of return, and I and J stand for the currencies of different countries. If the income from holding two currencies is not equal, there will be arbitrage: buy A foreign exchange and sell B foreign exchange. There is no risk in this arbitrage. Therefore, once the yields of the two currencies are not equal, the arbitrage mechanism will make the yields of the two currencies equal, that is to say, there is an inherent tendency and trend of interest rate equalization in currencies of different countries, which is the key aspect for interest rate indicators to affect the trend of foreign exchange rates, and it is also the key for us to interpret and grasp interest rate indicators. For example, after August 1987, with the fall of the dollar, people rushed to buy high-interest currencies, which made the exchange rate of the pound rise from 1.65 to 1.90 in a short time, with an increase of nearly 20%. In order to limit the upward trend of the pound, during the May-June period of 1988, the British interest rate was lowered several times in succession, from 10% to 7.5%, and the pound would fall every time. However, due to the rapid depreciation of the pound and the increasing inflationary pressure, the Bank of England was forced to raise interest rates several times, and the exchange rate of the pound began to pick up gradually.
Under the condition of open economy, the scale of international capital flow is huge, which greatly exceeds the international trade volume, indicating the great development of financial globalization. The influence of interest rate spread on exchange rate changes is more important than in the past. When a country tightens its credit, the interest rate will rise, which will lead to the interest rate difference in the international market, thus causing the international flow of short-term funds. Generally speaking, capital will always flow from low-interest countries to high-interest countries. In this way, if a country's interest rate is higher than other countries, it will attract a large amount of capital inflows and reduce domestic capital outflows, leading to the international market snapping up this currency; At the same time, the income and expenditure of capital account have been improved, and the exchange rate of domestic currency has been improved. On the other hand, if a country loosens credit, the interest rate will fall. If the interest rate level is lower than other countries, it will lead to a large outflow of capital, a decrease in the inflow of foreign capital, a deterioration in the balance of payments in the capital account, and the selling of currency in the foreign exchange market, leading to a decline in the exchange rate.
Under normal circumstances, when American interest rates fall, the trend of the dollar will be weak; American interest rates have risen, and the dollar has a preference. From the price trend of US Treasury bonds (especially long-term treasury bonds), we can find the trend of US interest rates, which can help predict the trend of the US dollar. If investors believe that inflation in the United States is under control, the interest income of existing national debt, especially short-term national debt, will be favored by investors and the bond price will rise. On the other hand, if investors think that inflation will intensify or worsen, then interest rates may rise to curb inflation and bond prices will fall. In the first half of 1980s, although there were a large number of trade deficits and huge fiscal deficits, the US dollar remained firm, which was the result of the high interest rate policy of the United States, prompting a large amount of capital to flow from Japan and Western Europe to the United States. The trend of the dollar is greatly influenced by interest rate factors.
inflation
Since 1970s, with the floating exchange rate replacing the fixed exchange rate, the influence of inflation on exchange rate changes has become more important. Inflation means an increase in the domestic price level. When the prices of most goods and services in an economy generally rise for a period of time, it is said that the economy is experiencing inflation.
Since price is the monetary expression of a country's commodity value, inflation also means that the value represented by the country's currency declines. In the case that the domestic and international commodity markets are closely linked, generally speaking, inflation and rising domestic prices will cause the decrease of export commodities and the increase of import commodities, thus affecting the supply and demand relationship in the foreign exchange market and leading to fluctuations in the domestic exchange rate. At the same time, the decline in the intrinsic value of a country's currency will inevitably affect its external value and weaken its credit status in the international market. It is expected that the exchange rate of the country's currency will weaken due to inflation, and the held currency will be converted into other currencies, which will lead to a decline in the exchange rate. According to law of one price and purchasing power parity theory, when the inflation rate of one country is higher than that of another country, the value actually represented by its currency is decreasing relative to that of another country, and the exchange rate of its currency will decline. On the contrary, it will rise. For example, before the 1990s, an important reason why the exchange rates of the Japanese yen and the former West German mark were very strong was that the inflation rates in these two countries were very low. The inflation rates in Britain and Italy are often higher than the average level of other western countries, so the exchange rates of these two currencies are in a downward trend. Specifically, there are three indicators to measure the change of inflation rate: producer price index, consumer price index and retail price index, which we will discuss separately below.
The meaning and explanation of (1) producer price index
Producer price index is a price index to measure the goods that manufacturers and farmers sell to stores. It mainly reflects the price changes of means of production and is used to measure the cost price changes of various commodities at different production stages. The general statistics department collects the quotation information of various products of major manufacturers, and then converts it into decimal form through weighting to facilitate comparison. For example, China has a constant price of 1.980 and a constant price of 1.990, and the United States compares the index of 1.967 as 1.000. The index is released once a month by the Ministry of Labor, which has a great influence on the price level in the future (usually three months later) and also indicates the overall price trend in the future. '
Therefore, producer price index is the leading index of inflation. When the price of raw materials and semi-finished products rises, it will be reflected in the price of consumer goods in a few months, leading to an increase in the overall price level and an increase in inflation. On the contrary, when the index drops, that is, the prices of means of production tend to fall in the production process, it will also cause the overall price level to drop and weaken the pressure of inflation. However, because the data fails to include some commercial discounts, it cannot fully reflect the real price increase rate, which sometimes leads to exaggerated effects. In addition, because agricultural products change with seasons and energy prices change periodically, which has a great impact on the price index, it is necessary to sort out or eliminate food and energy prices before making an analysis.
In the foreign exchange market, traders are very concerned about this indicator. If the producer price index is higher than expected, there is a possibility of inflation, and the central bank may implement a tight monetary policy, which will have a good impact on the country's currency. If the producer price index drops, it will have the opposite effect.
(2) The meaning and explanation of consumer price index.
Consumer price index (CPI) is a measure of the price of a fixed basket of consumer goods, which mainly reflects the price changes of goods and services paid by consumers, and is also a tool to measure the level of inflation, expressed as percentage changes. In the United States, the main commodities that constitute this indicator are divided into seven categories, including: food, wine and beverage houses; Clothing; Transportation; Medical and health care; Entertainment; Other goods and services. In the United States, the consumer price index is released by the Bureau of Labor Statistics every month, and there are two different consumer price indexes. The first is the consumer price index, or CPW for short. The second is the consumer price index (CPIU) of urban consumers.
The CPI price index is very important and enlightening, so we must grasp it carefully, because sometimes it is announced that the index is rising, the currency exchange rate is improving, and sometimes it is the opposite. Because the level of consumer price index shows the purchasing power of consumers and also reflects the economic prosperity, if the index drops, it reflects the economic recession, which is bound to be unfavorable to the trend of currency exchange rate. But if the consumer price index rises, will the exchange rate be favorable? Not necessarily, it depends on the "increase" of the consumer price index. If the index rises moderately, it means that the economy is stable and upward, which is of course beneficial to the country's currency. But if the index rises too much, it will have a negative impact, because the price index is inversely proportional to purchasing power. The more expensive the price, the lower the purchasing power of the currency, which is bound to be unfavorable to the country's currency. If the impact on interest rate is considered, the impact of this indicator on foreign exchange rate is more complicated. When a country's consumer price index rises, it shows that its inflation rate rises, that is, its currency purchasing power weakens. According to purchasing power parity theory, its currency should weaken. On the contrary, when a country's consumer price index drops, it shows that the country's inflation rate drops, that is, the purchasing power of money rises. According to the purchasing power parity theory, the country's currency should appreciate. However, because all countries take controlling inflation as their primary task, rising inflation also brings opportunities for rising interest rates, which is beneficial to the currency. If the inflation rate is controlled and reduced, interest rates will also tend to fall, which will weaken the currency in this region. The policy of reducing inflation will lead to the "tequila effect", which is a common phenomenon in Latin American countries.
D. Unemployment rate
The meaning of (1) unemployment rate
Unemployment rate refers to the number of unemployed workers who are willing to work in a certain period of time. Through this index, we can judge the employment situation of all working people in a certain period. The unemployment rate has always been regarded as an indicator reflecting the overall economic situation, and it is the first economic data released every month, so foreign exchange traders and researchers like to use the unemployment rate indicator to predict other related indicators such as industrial production, personal income and even new housing construction. In the basic analysis of foreign exchange transactions, the unemployment rate indicator is called the "crown jewel" among all economic indicators, and it is the most sensitive monthly economic indicator in the market.
(2) the explanation of unemployment rate
Under normal circumstances, the decline in unemployment rate represents the healthy development of the overall economy and is conducive to currency appreciation; The rising unemployment rate means that economic development slows down and declines, which is not conducive to currency appreciation. If we use the inflation index of the same period to analyze the unemployment rate, we can know whether the economic development at that time was overheated, whether it would constitute the pressure of raising interest rates, or whether it was necessary to stimulate economic development by cutting interest rates. The Bureau of Labor Statistics conducts a monthly sample survey of American families. If the unemployment rate announced by the United States this month is lower than last month, it means that the employment situation has improved and the overall economic situation is good, which is conducive to the rise of the US dollar. If the unemployment rate is large, it means that the US economy may fall into recession, which will have a negative impact on the US dollar. 1997 and 1998, the unemployment rate in the United States was 4.9% and 4.5% respectively. 1999, the unemployment rate dropped again, reaching the lowest point in 30 years. This shows that the US economy is in good condition, which strongly supports the strength of the US dollar against other major currencies.
In addition, relative to the unemployment rate is employment data, the most representative of which is non-agricultural employment data. Non-agricultural employment figures are a kind of unemployment figures, which mainly count job changes outside agricultural production. It can reflect the development and growth of manufacturing and service industries. If the number is reduced, it means that enterprises will reduce production and the economy will enter a depression. With the rapid development of social economy, consumption will naturally increase, and jobs in the consumer and service industries will also increase. When the number of non-agricultural employees increases substantially, it should be beneficial to the exchange rate in theory; On the contrary, the opposite is true. Therefore, this data is an important indicator to observe the degree and situation of socio-economic and financial development.
E. Trade balance
The meaning of (1) trade balance
The figure of trade balance reflects the commodity trade between countries, which is an important indicator to judge the macro-economic operation and one of the important indicators for the basic analysis of foreign exchange transactions. What happens if a country's total imports are greater than its total exports? Trade deficit? Situation; If the export is larger than the import, it is called. Trade surplus? ; If export equals import, what is it called? Trade balance? . American trade figures are published once a month, and last month's figures are published at the end of each month. China also publishes import and export data at least once a quarter.
(2) the explanation of trade balance
If a country often runs a trade deficit, national income will flow out of the country, thus weakening the national economic performance. If the government wants to improve this situation, it must devalue its own currency, because devaluation, that is, lowering the price of export commodities in disguise, can improve the competitiveness of export products. Therefore, when the country's foreign trade deficit expands, it will weaken the country's currency and make the country's currency fall; On the contrary, when there is a foreign trade surplus, it is good for this currency. Therefore, the international trade situation is a very important factor affecting the foreign exchange rate. The trade friction between Japan and the United States fully illustrates this point. The trade deficit between the United States and Japan has occurred year after year, which has caused the deterioration of the US trade balance. In order to limit Japan's trade surplus with the United States, the United States government put pressure on Japan to force the yen to appreciate. On the other hand, the Japanese government tries its best to prevent the yen from appreciating too fast in order to maintain a favorable trade situation.
From the influence of a country's foreign trade on the exchange rate, we can see that the balance of payments directly affects the change of a country's exchange rate. If there is a surplus in a country's balance of payments, the country's demand for money will increase, and the foreign exchange flowing into the country will increase, which will lead to an increase in the currency exchange rate. On the contrary, if a country has a deficit in its balance of payments, the demand for its currency will decrease, and the foreign exchange flowing into the country will decrease, which will lead to the decline of its currency exchange rate and the depreciation of its local currency. Specifically, in the balance of payments, in addition to the above-mentioned trade items, there are also capital items that have the greatest impact on exchange rate changes. The surplus or deficit of trade balance directly affects the rise or fall of currency exchange rate. For example, an important reason for the decline of the US dollar exchange rate is that the US trade deficit is getting bigger and bigger. On the contrary, due to the huge trade surplus, Japan's balance of payments is in good condition, and the foreign exchange rate of the yen is on the rise. Similarly, the surplus or deficit of the capital account directly affects the rise and fall of the currency exchange rate. When a country has a large deficit in its capital account and other items in its balance of payments are insufficient to make up for it, the country will have a deficit in its balance of payments, which will lead to a decline in the foreign exchange rate of its own currency. On the contrary, it will cause the exchange rate of the domestic currency to rise.
F level of foreign exchange reserves and foreign debts
The situation of foreign exchange reserves is an important factor in the basic analysis of foreign exchange transactions, and its important role is to maintain the stability of the foreign exchange market. Whether a country's currency is stable or not depends largely on the foreign exchange liquidity that its foreign exchange reserves can guarantee under specific market conditions. From the international experience, even if a country's currency meets all the theoretical conditions for exchange rate stability, if it is impacted by speculative forces and cannot meet the sudden expansion of foreign exchange flow in the foreign exchange market in a short time, it will have to depreciate. Judging from the 1998 Asian financial crisis, in a strong speculative atmosphere, impatient nationals and cautious foreign investors often lose confidence in the currency, which has become a fatal force to promote the violent fluctuations in the foreign exchange market. Driven by this force, the government's efforts to maintain the exchange rate were actually forced to give up long before the reserves fell to zero.
The structure and level of foreign debt is also one of the important factors in the basic analysis of foreign exchange transactions. If a country has external liabilities, it will inevitably affect the foreign exchange market; If the foreign debt is not properly managed, the resilience of its foreign exchange reserves will be weakened and the stability of its currency will be affected. Many countries, such as Argentina and Brazil, have more foreign debts than reserves. Their initial idea is that foreign debts will continue to flow. However, under certain market conditions, if the country fails to raise funds on a large scale through the international market and loses its original financing channels (as happened in the Southeast Asian currency crisis and the Argentine financial crisis), it can only use foreign exchange reserves to meet liquidity and maintain market confidence, and the stability of foreign exchange reserves will be challenged. From the international experience, when the exchange rate fluctuates due to improper foreign debt management, the exchange rate of the affected currency is often underestimated. The degree of underestimation mainly depends on the stability of economic system and social order. And if a country's short-term foreign debt is mostly, it will directly impact foreign exchange reserves. What if there is an international monetary fund? Rescue? In addition to the commercial conditions of IMF loans, the sharp devaluation of the currency has to bear additional adjustment burden.
G. Budget deficit (budget deficit)
This data is released by the Ministry of Finance every month, which mainly describes the implementation of the government budget and explains the government's total income and expenditure: if the income exceeds the expenditure, it is a budget deficit; If the income exceeds the expenditure, it is a budget surplus; Balance of payments means a balanced budget. Foreign exchange traders can use these data to understand the actual budget implementation of the government, and at the same time, they can predict whether the Ministry of Finance needs to issue bonds or treasury bills to make up for the deficit in the short term, because the short-term interest rate will be affected by the issuance of bonds or not. Under normal circumstances, the foreign exchange market is skeptical about the government budget deficit. When the deficit increases, the market will expect the currency to fall, and when the deficit decreases, it will be beneficial to the currency.
H. retail sales
Retail sales is actually a statistical summary of retail sales, including the total value of goods sold by all shops mainly engaged in retail business in cash or credit. Expenses incurred in the service industry are not included in the retail sales.
Retail data plays an important guiding role in judging a country's economic situation and prospects, because retail sales directly reflect the increase or decrease of consumer spending. In western developed countries, consumer spending usually accounts for more than half of the national economy, such as the United States, Britain and other countries, which can account for two-thirds.
In the United States, the Statistics Bureau of the Ministry of Commerce conducts a national retail sampling survey once a month, which targets all types and sizes of retailers (all companies registered in the Ministry of Commerce). Because the scope of retail industry is too wide, random sampling survey is adopted to obtain more representative data. Retailers of durable consumer goods include automobile retailers, supermarkets, drug and alcohol distributors, etc. Because the data of service industry is difficult to collect and calculate, it is excluded, but service industry is also an important part of consumption expenditure, and its consumption increase or decrease can be obtained from the data of personal consumption expenditure (including commodity retail and services).
In western countries, automobile sales constitute the largest share of retail sales, generally accounting for 25%. Therefore, when the retail sales are announced, a retail data excluding car sales will be released. In addition, because food and energy sales are greatly affected by seasons, sometimes food and energy are excluded and a core retail is released.
The increase of a country's retail sales means that the country's consumption expenditure increases, the economic situation improves, and interest rates may be raised, which is beneficial to the country's currency. On the contrary, if the retail sales decline, it means that the economy is slowing down or not, and interest rates may be lowered, which is not good for the country's currency.
In the United States, last month's retail sales data is usually released on June 1 1- 14 of each month.
I. Consumer confidence index
In the 1940s, in order to study the influence of consumer demand on the economic cycle, the research center of the University of Michigan first compiled the consumer confidence index, and then some European countries began to establish and compile the consumer confidence index.
The consumer confidence index of ConferenceBoard is different from that of University of Michigan. The former set the level of 65,438+0,985 as 65,438+0,000, which was obtained from the monthly sample survey of 5,000 families conducted by the new york NGO Federation. The survey includes consumers' views on economic prosperity, job market and personal income.
The release time is the last Tuesday of each month to release the data of the current month. Interpretation: medium importance. This data, combined with other indexes such as consumer confidence of the University of Michigan, will help to understand the current and future mentality of consumers.