Consumer Price Index (CPI).
Inflation has always been one of the most powerful indicators of the national currency stability assessment, to evaluate the level of inflation may be through the analysis of the consumer price index.Consumer Price Index (CPI) - abbreviated to CPI, is a measure of the cost of a basket of consumer goods and services required. CPI is calculated based on price changes for each of the components of the basket, taking into consideration and the importance of a product in the consumer basket.
Furthermore, the index is used in the preparation of a living wage, which is based on many other factors in the social sphere and economy.
Increasing the total cost of the consumer basket may indicate an increased level of inflation and is usually negative consequences, both for the national currency, as well as for the economy as a whole.
Reducing the average cost of goods and services in the basket, shows a positive trend, and the strengthening of the national currency, and is a testament to deflation.
Consumer Price Index index is often used as a signal for the opening of transactions on the foreign exchange market forex or stock market. This is due to the fact that the exchange rate and the prices of some stocks is quite sensitive to any changes in the consumer price index.
Normally, when trading using trading on the news, while reducing the index, open the deal to buy the currency, and with an increase in the cost of the consumer basket open sell orders.
More understandable active trading option appears on a specific example.
Of forex calendar learn, when will the publication of the Consumer Price Index for the Euro, after being prepared for a deal on the currency pair EUR / USD. If you leave a message on decrease in the consumer price index, open the deal to buy, as the base currency Euro stands in the currency pair EUR / USD.
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