Appendix On Economic Terms
Definitions Of All Terms Used:
(q/q) = Quarter-Over-Quarter: meaning the change from the past quarter to the present quarter.
(m/m) = Month-Over-Month: meaning the change from the past month to the present month.
(y/y) = Year-Over-Year: meaning the change from the past year to the present year.
PMI = Purchasing Managers’ Index: Released monthly. It is derived from surveying a large number of “purchasing managers” (basically an employee or owner of a company who is responsible for buying goods or services). A reading above 50.0 indicates industry expansion and a reading below 50.0 indicates industry contraction.
ADP Non-Farm Employment Change: “Estimated change in the number of employed people during the previous month, excluding the farming industry and government” (Forexfactory.com).
Asset Purchase Facility: Measures the “total value of money the BOE will create and use to purchase assets in the open market” (Forexfactory.com)
Official Bank Rate: The “Interest rate at which banks lend balances held at the BOE to other banks” (Forexfactory.com)
CPI = Consumer Price Index: Measures the “change in the price of goods and services purchased by consumers” (Forexfactory.com). This reading is very important because “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” (Forexfactory.com). This reading is released monthly and is often interpreted as the annualized present level of inflation, but only if it says (y/y) after it. If it says (m/m) then it is interpreted as the present level of inflation for the month.
Prelim CPI: Preliminary reading of CPI
Flash Estimate CPI: The source that provides the data (the “Eurostat” for the Eurozone, etc.) “bases this estimate on energy prices and 13 euro area member states that report early CPI data. While the report is narrow and void of line items, it’s extremely early and tends to have a significant impact” (Forexfactory.com). The second report (the one that comes after the Flash Estimate) is called the Final.
Minimum Bid Rate: The “interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system” (Forexfactory.com)
Trade Balance: Also known as the “Balance Of Trade” (BOT). Released monthly. It is the “difference in value between imported and exported goods during the previous month” (Forexfactory.com), which means that it is calculated by taking the value of a country’s imports and subtracting it from the value of a country’s exports. If the result is negative the country has a “Trade Deficit,” and if it is positive the country has a “Trade Surplus.”
HSBC = The Hongkong and Shanghai Banking Corporation: The HSBC Manufacturing PMI report is an alternative report to the one released by the China Federation of Logistics and Purchasing (CFLP), which is the source of the normal Manufacturing PMI report.
Overnight Rate: The “interest rate at which major financial institutions borrow and lend overnight funds between themselves” (Forexfactory.com).
Cash Rate: The “interest rate for overnight money market deposits” (Forexfactory.com).