Forex traders, like all great investors in investment, attention to economic news today. This is due to the financial (or economic indicators) often shapes trading, be it a stock exchange or foreign exchange markets. One of the most common economic indicators, which use the Forex investors and others, in terms of durable goods report.
Define durable goods
Before discussing the current report, the term "durable goods" needs to be explained. Durable goods are goods that last more than three years. In other words, the consumer expects to make a purchase that should not be replaced in the near future. Examples of durable goods such as cars, furniture, appliances, tools and plant equipment.
The ratio of durable goods
The durable goods report was released on 20 th of each month for the previous month's activity. The report measures the number of new orders for durable goods from a sample of more than 4,000 manufacturers of about 85 industries. In general, the numbers of the defense and transportation are eliminated from the report because of its volatility.
This report is essential for investors because it is considered a primary key indicator for the economy. This means that if the numbers are strong (ie high number of orders), consumers are more likely to buy more sustainable products, which will strengthen the national currency. On the other hand, if decreases the number of durable goods, consumers are more likely to buy fewer goods, which can adversely affect the exchange rate of a country.
Non-defense capital goods
Besides numerous other failures of durable goods orders, the report also reflects the capital goods orders excluding defense. No capital goods orders relating to non-defense related equipment orders. This is an important fact because it is practically equivalent to the production durable equipment (PDE) in the category of the GDP indicator of great economic importance. Like other classes, this class of PDE-as is a strong indicator of future economic trends. If capital increases do not include the defense of property is a good sign that the economy is growing (positive effect on the rate of change of a country). On the other hand, a decline in orders could mean an imminent slowdown in the economy.
