Fundamental Analysis in Forex – Durable Goods Orders
Posted in Analysis by Lewis Wolfe
Monday, February 9th, 2009 14:19 PM GMT
In times of global recession, it’s always the bad news first. Falling indices everywhere, crisis, panic…
At some point in the wonderful economic cycle that we seem permanently locked in, the good news – the green shoots of recovery – starts to become more important. Now, this is particularly so in the stock and bond markets, but with fundamental analysis in the forex market also. Durable goods orders are one of the important indicators of future industrial production and expenditure.
Durable Goods Orders
This is an old-style picture of the economy – the manufacturing sector. Maybe the markets pay too much attention to it, for old times sake – but if traders pay attention, it becomes important in itself.
The orders for durable goods data give an indication of how busy factories will be in the next few months, as manufacturers begin work to complete orders. So it’s an index not only of consumer confidence, more autos, more white goods, but also the likelihood of increased business investment.
Curing Crises
As is common, (1929 etc) with global downturn is that the financial crisis showed first – bank collapses, bailouts etc. – which obscured the (slightly separate) economic crisis – manufacturing output drops, job losses – which came along afterwards. Probably, the fastest cure for the financial crisis is business, manufacturing upturn – we’re nowhere near that time yet, but now is the time to get in some practice at looking at fundamental manufacturing figures if you want to improve your forex trading performance…
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