Ian Macfarlane was the Governor of the Reserve Bank of Australia from 1996 to September of 2006.
Governor since 1996, Mr. Macfarlane was one of the longest serving central bankers in the group. Educated at University of Sydney, Mr. Macfarlane worked for the RBA from 1979 up until he was replaced by Glenn Stevens, serving a variety of positions from Head of Research to Deputy Governor.
Ichimoku Kinko Hyo
Ichimoku Kinko Hyo is an equilibrium chart used in technical analysis. The chart’s name means, roughly, “equilibrium chart at a glance”, which also describes its function: providing information about the equilibrium behavior of an asset with a single look. Ichimoku Kinko Hyo was developed by Goichi Hosoda and released in 1968, although the chart didn’t gain popularity in the West until the 1990s.
Ichimoku Kinko Hyo is composed of five lines. Tenkan-sen averages the highest high and lowest low and is calculated over a fairly short period of time ( seven to nine periods. ) Kijun-sen uses the same equation, but is calculated over twenty-two periods. Chikou Span plots the current closing price a full twenty-two periods behind. Senkou Span A averages Tenkan-sen and Kijun-sen, and is plotted twenty-six periods ahead. Senkou Span B averages the highest high and lowest low over the last forty-four periods, and is plotted twenty-two periods ahead. The space between Senkou Spans A and B is known as the Kumo.Traders use Ichimoku Kinko Hyo to generate a variety of signals for market behavior, based on the interaction of the chart’s lines with the Kumo. Because of the comprehensiveness of the chart, traders consider it to be a very powerful tool for technical analysis. However, foreign exchange traders should be aware of the chart’s drawbacks in forex markets: since forex markets never close, no close prices are generated, and it’s unclear how the Chikou Span should be plotted. Good judgment should therefore be used both in choosing the time periods from which to generate the chart, and in deciding which price should be chosen as a forex market’s close price.
The International Monetary Fund ( IMF ) is an organization of 186 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. It oversees the global financial systems of its member countries by monitoring policies that have an impact on exchange rates and the balance of payments. It also offers highly leveraged loans to underdeveloped countries.
The IMF was formed in July 1944 during the UN Monetary and Financial Conference when the delegates agreed on a framework for international economic cooperation. This took place after the infamous Great Depression when countries attempted to save their economies by raising barriers to foreign trade and devaluing their own currencies. As these measures proved to be self-defeating, it became necessary to form an institution that would ensure exchange rate stability and encourage member countries to eliminate trade restrictions. The IMF came into formal existence after its first 29 member countries signed the Articles of Agreement. From then on, the number of IMF member countries have more than quadrupled to 186 countries today.
Imports – Australia
Release schedule : 1:30 ( GMT ); monthly, in the fifth week following the reporting month.
Revisions schedule : Monthly
Source of report : Australian Bureau of Statistics
Web Address : http://www.abs.gov.au/
Address of release : http://www.abs.gov.au/ausstats/abs%40.nsf/mf/5368.0
The currency of India. Currency code ( INR )
The currency of Indonesia. Currency code ( IDR )
Industrial Production and Capacity Utilization
Industrial Production and Capacity Utilization ( IPCU ) is a measure of economic activity, released on a monthly basis by the United States Federal Reserve. The IPCU report for each month contains data for previous months ( for example, June’s report releases information on May ) about the total amount of US industrial production for that month, expressed as a percentage of the gross production for a previous baseline year. The report also gives information about percentage changes from month to month and year to year, as well as a detailed breakdown of production by industry grouping, most broadly for manufacturing, mining and utilities. The data in the report is based on employment records that detail the total hours worked by industrial-sector employees.
The report also includes a measure of capacity utilization, meaning the percentage ratio of actual production to potential production. The report presents data about average capacity over a number of years, a record of percentage change in capacity from month to month, and a breakdown of capacity measures by industry and by stage of completeness ( from crude to finished materials. )
Traders consider the IPCU report important as a gauge for the future performance of assets in the marketplace. Because of this, the report can also function as a “trigger” to increase buying or selling pressure in certain industries. A capacity utilization percentage of 85% or more can also be considered a signal for imminent inflation, but the inherent difficulty of measuring industrial capacity implies that this measure shouldn’t be exclusively relied on to predict market behavior.
Definition: An index designed to measure changes in the level of output in the industrial sector of the economy. The index is grouped by both products ( consumer goods, business equipment, intermediate goods, and materials ) and industry ( manufacturing, mining, and utilities ).
Source: Board of Governors of the Federal Reserve System
Availability: Preliminary estimate released around the middle of the month for the immediately preceding month. Reason: While the industrial sector of the economy represents only about 20 percent of GDP, because changes in GDP are heavily concentrated in the industrial sector changes in this index provide useful information on the current growth of GDP. The level of capacity utilization in the industrial sector provides information on the overall level of resource utilization in the economy which may in turn provide information on the likely future course of inflation.
The index of Industrial Production is a fixed-weight measure of the physical output of the nation’s factories, mines, and utilities. Manufacturing production, the largest component of the total, can be accurately predicted using total manufacturing hours worked from the employment report. One of the bigger wildcards in this report is utility production, which can be quite volatile due to swings in the weather. Severe hot or cold spells can boost production as increased heating/cooling needs drive utility production up.
In addition to production, this monthly report also provides a measure of capacity utilization. Though the rate of capacity utilization is seen as a critical gauge of the slack available in the economy, the market does not completely trust this measure. Capacity is very difficult to measure, and the Fed essentially assumes that growth in capacity in any given year follows a straight line. One can therefore predict the capacity utilization rate quite accurately based on the assumption for production growth. The 85% mark is seen as a key barrier over which inflationary pressures are generated, but given revisions to these data and the difficulties with capacity measurement, the 85% mark should be viewed cautiously. It would be appropriate to look for corroborating inflation indications from commodity prices and vendor deliveries.
Initial Jobless Claims
The Initial Jobless Claims Report is a method of noticing changes in the employment market. This report is therefore an economic indicator, to some extent. It is provided by the Employment and Training Administration of the Department of Labor, and the report comes out for viewing on a weekly basis, each Thursday. The report provides information on the data from the previous week, ending on the Saturday before.The Initial Jobless Claims report provides information on how many individuals have filed for state unemployment benefits during the previous week. This number can be a predictor of what the economy is doing. If there is a significant increase in these claims, it could potentially be pointing to slowing job growth, as unemployment rises. On the other hand, when this number decreases significantly, it can be a sign that the economy is accelerating in job growth and therefore is economically sound. Yet, most investors will only consider this in a four week average, as these factors can be very volatile. Finally, most investors will tell you that a significant number of changes are a move of at least 30,000 claims up or down. Anything less can be merely normal fluctuations.
Those that are interested in learning this information can get the report each Thursday morning at the Department of Labor’s website.
The foreign exchange rates that large international banks quote to other large international banks. Fat chance you’d ever get access to this rate.
Interest Rate Differential
In the foreign exchange market, the interest rate differential ( IRD ) refers to the difference in interest rates between two similar interest-bearing currencies. In the spot foreign exchange market, this pertains to the difference in interest rates in a pair.
For examle, if the Australian dollar has an interest rate of 4.50% and the Japanese yen has an interest rate of 0.10%, then the interest rate differential between the two is 4.40%.
The IRD is one of the most important factors to consider when engaging in carry trade.
Interest Rate Risk
The potential for losses arising from changes in interest rates.
International Monetary Fund Special Drawing Rights
The currency of the International Monetary Fund.( IMF ) Currency code ( XDR )
Interest Rate Risk
The potential for losses arising from changes in interest rates.
International Monetary Fund Special Drawing Rights
The currency of the International Monetary Fund.( IMF ) Currency code ( XDR )
Inventories – Australia
Release schedule: 1:30 ( GMT ); quarterly, three months after the reported quarter
Source of report: Australian Bureau of Statistics
Web Address: http://www.abs.gov.au/
Address of release: http://www.abs.gov.au/ausstats/abs%40.nsf/mf/5676.0
Inverted Head and Shoulders
An Inverted Head and Shoulders is a reversal pattern consisting of three lows with the Head represented as central low being the lowest peak of the pattern and the flanking peaks as the shoulders.
The inverted head and shoulders represents a decline to a new low and a rally to immediate resistance followed by a second decline to a lower level then a third, more modest decline and rally through resistance.A ‘neckline’ may be drawn through the pattern reaching from the top of one ‘shoulder’ to the other, with the inverted head and shoulders a breakout through this line represents a good buy opportunity whereas with a normal head and shoulders a breakout through this line’s counterpart ( the neckline representing the uptrend ) would indicate a good sell opportunity.
Head and shoulders patterns are considered to be among the most important of all reversal patterns as they are both common and reliable.
The currency of Iran. Currency code ( IRR )
Ireland is an island nation located in northwest region of Europe, right beside the United Kingdom. Interestingly, the island itself is split into two, the Republic of Ireland, and Northern Ireland, which is part of the United Kingdom.Ireland uses the euro as its currency, making it part of both the euro zone and the EU.
The Irish economy is heavily services dependent, focusing primarily on high-tech and knowledge services. Other industries that play an integral part to the Irish economy are pharmaceuticals, food products, computer software, and medical equipment.
Naturally, one if its largest export partners is the United Kingdom, who take up 15% of all exports. First is the United States, who are responsible for 23% of total exports.
Ireland is also part of the PIIGS and was the second nation to receive a bailout from the EU-ECB-IMF Troika to help shore up its banking sector.
ISM Manufacturing Survey
The ISM Manufacturing Survey is used as an economic indicator of the market. It is felt that this survey is very important in determining what the market is likely to do, and it is published by the Institute for Supply Management, on a monthly basis. The report will indicate information from the previous month’s historical data, and is released on the first business day after the close of the month.
The ISM Manufacturing Survey provides details in the manufacturing aspect of the economy, and therefore is considered a strong indictor of the economy’s movement. It is also the very first report that is provided as an economic indicator for the month, therefore it perhaps has more significant attention and benefit than might otherwise be the case. The survey deals specifically with the manufacturing industry in the country. ISM provides a wide range of other reports as well that help to define risk in the market at any given time.
Ivey Purchasing Managers Index
A measure of the change in purchases made by corporate executives. Generally used to determine economic growth and measure business optimism. If the optimal economic conditions are predicted, businesses will spend more in order to accommodate future demand for goods and services.
The currency of Iceland. Currency code ( ISK )
IFO Busines Climate Index
The IFO Business Climate Index is a monthly survey that measures the current business conditions of German firms ( manufacturing, construction, wholesale and retail industries ) and their business expectations six months ahead.
The index is based on a on a 7,000 survey replies. Regarding the current business situation, a company is asked to mark their condition as “good,” “satisfactory,” or “poor.” Also, the firms are asked to grade their business expectations as “more favorable,” “unchanged,” or “more unfavorable.” The headline business climate index is derived from the current and expected business conditions results.
A reading above 100 represents a positive business condition and outlook. On the other hand, a reading below 100 indicates a negative sentiment.
The index is used as a leading indicator of Germany’s economy. Germany comprises about 25% of the Euro zone’s GDP. Given this, the index can also be employed as a principal barometer of the Euro zone’s economic state.
Imports refer to goods and services purchased from another country. For instance, industrialized countries usually import oil from OPEC countries. The term ‘imports’ also refers to the economic value of all goods and services bought abroad.
Imports are generally composed of agricultural products ( rice, corn, wheat ), fuel ( oil, petroleum ), metals ( gold, silver, copper ), equipment and machinery, and intermediate services ( transportation, banking, shipping ).
Imports contribute to domestic consumption by increasing consumers’ purchases of goods and services. It also adds to domestic investment by enhancing production capabilities with new tools and equipment. Lastly, it contributes to domestic production through an increased supply of raw materials and spare parts.
A country’s trade balance is affected by its imports. A trade surplus occurs when a country’s imports are less than its exports while a trade deficit occurs when its imports are larger than its exports. If a trade deficit persists, it usually implies that local production is weak since the demand for foreign goods and services is higher than the demand for domestic goods and services. This could translate to weaker employment and eventually lower consumption.
An exchange rate quoted as the foreign currency per unit of domestic currency. The domestic currency is always denoted as 1 while the foreign currency is variable.
Industrial Production – Japan
Release schedule : 23:50 ( GMT ); monthly; one month after the reporting period
Revisions schedule : Final, revised figures come out two weeks after the preliminary report.
Source of report : Ministry of Economy, Trade and Industry ( METI )
WebAddress : http://www.meti.go.jp/english/index.html
Address of release : http://www.meti.go.jp/english/statistics/index.html
Inflation is defined as the rise of the overall prices of goods and services over a certain period in time. This means that, as general level of prices climb, the purchasing power for each unit of currency declines. For example, there is inflation if one dollar can buy two candy bars in 2000 and only one candy bar in 2009. Most economists agree that inflation is caused primarily by the imbalanced growth of money supply with respect to the rate of economic expansion. Other reasons include excessive demand for goods and services and decreased availability of supply during scarcities.
Inflation has good and bad effects depending on the people concerned. For instance, high inflation is helpful to borrowers as it decreases the real value of money they pay to their lenders. Consumers, on the other hand, are obviously hurt by high inflation as it erodes their purchasing power.
In the foreign exchange market, the issue of inflation is very important because it is one of the primary factors central banks consider when determining interest rates. The Federal Reserve, the US’s prime body in determining interest rates, use a report called the Personal Consumption Expenditure as their preferred method to measure inflation while other central banks, such as the European Central Bank, use a report called the Consumer Price Index.
The Consumer Price Index measures inflation by getting the average price of a basket of goods typically bought by a consumer and comparing it with the value of basket of goods in a different time. The resulting percent change is determined as the rate of inflation. The index is usually computed yearly, quarterly or even monthly in some countries.
As you can see, it is the job of central banks to maintain a certain balance in setting interest rates to make sure it doesn’t get too high or low and hurt the economy.
Other related issues with inflation are: disinflation – the fall in the rate of inflation; stagflation – high rate of inflation during a period of stagnant economic growth; hyperinflation – severe increase in the rate of inflation.
The original deposit of collateral needed to enter in a trade.
A rate which a borrower pays for holding a lender’s money.
Differences in interest rates affect the relative worth of currencies relative to another.
Interest rates dictate flows of investment. An increase in interest rates in a particular country encourages investment in that country since it offers higher returns. This causes the demand for their currency to rise. As demand for that currency rises, it becomes scarcer and thus more valuable. When central banks change interest rates, the value of their currency relative to other currencies also changes. Countries that undergo interest rate cuts tend to experience a depreciation of their currency.
Nominal versus Real Interest Rates
The nominal interest rate is the rate of return without any adjustments for inflation. The real interest rate is the nominal rate minus the effect of inflation.
Interest rate parity
The interest rate parity theory helps describe the relationship between foreign exchange rates and interest rates. According to the theory of interest rate parity ( IRP ) the difference in national interest rates for financial securities and derivatives of similar risk and maturities should be equal to the forward rate discount or premium for the foreign currency.
This means that when an investor is choosing between whether to invest in the domestic market or in a foreign market, the returns would be approximately equal, given that the risks and maturities of the securities are similar.
What this means is that differences in national interest rates help set the forward rates at which financial securities are set.
International Merchandise Trade Canada
Release Schedule : 8:30 AM ( EST ); monthly, on the second week of each month
Revision Schedule: Monthly
Source of Report : Statistics Canada
Web Address : http://www.statcan.ca/start.html
Address of Release : http://www.statcan.ca/english/Release/index.htm
Open positions that are usually closed by the end of the trading da
A one candle bullish reversal pattern. In a downtrend, the open is lower, then it trades higher, but closes near its open.
Investment management firms manage financial assets and funds of other institutions. They use the currency market to facilitate transactions in foreign securities. Aside from the international equity portfolio of firms, several new forex mutual funds have been created to allow investors to track long-term trends in currencies. Some investors use these funds to help them diversify their portfolios. This can also work as a forex trading strategy as it can be used to hedge currency losses in the spot market, especially in terms of the US dollar. Most investment management firms are able to manage the currency exposures of clients with the aim of generating profits as well as limiting risk. The actual number of these investment funds that exist is small ( relative to banking institutions and commercial traders ). Many investment firms have a large amount of assets under management and thus account for a huge share of daily currency trades.
The foreign exchange market is split into levels of access. The top level is the interbank market, which is made up of the largest investment banking firms. The interbank market accounts for 53% of all the forex transactions. Some smaller investment banks, though, are tiered below this level.
The currency of Iraq. Currency code ( IQD )
ISM Non-Manufacturing Survey
The ISM Non Manufacturing Survey provides for a detailed look at the economy from a non manufacturing standpoint. ISM, or Institute for Supply Management, provides this survey each month, based on the previous month’s data. The data of the previous month is analyzed and the report is provided on the third business day of the month following its close. The data provided is based on the entire United States data, as a whole.
This survey reports new orders index percentages, as well as employment index percentages. This information is based on a collection of 375 purchasing executives’ surveys from those that are working in the non manufacturing industries throughout the country. The surveys are collected then compared to the previous month’s data to show any change or predictors in the economy. While these surveys are provided based on data supplied by these agents, they are not a definite indicator of the economy. Rather the report should be regarded as one of several tools offered to rate the risks and the market trends happening. ISM provides several other surveys, including ISM Manufacturing Survey for this purpose.vey Purchasing Managers Index ( PMI ) – Canada
Release Schedule : 10:00 AM ( EST ); monthly, on the fourth working day of the following month
Source of Report : Joint Sponsorship between the Purchasing Management Association of Canada and the Richard Ivey School of Business
Web Address : http://iveypmi.uwo.ca/english/welcomeeng.htm
Address of Release : http://iveypmi.uwo.ca/english/historic_data.htm