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Business Confidence Report – Forex Economic Calendar

Business confidence announcements report on how confident the business managers within an economy are. Confident business managers tend to hire more people and invest in business expan­sion, new products, and more inventory. Insecure business manag­ers tend to hire fewer people (or even lay off employees) and invest less in business expansion, new products, and more inventory.

Business confidence data are released in multiple announce­ments that you need to be aware of:

  1. Institute for Supply Management (ISM) Manufacturing Business SurveySurvey of purchasing managers’ confidence in the economy based on new orders, production, employment, deliveries, inventories, and so on.
  2. German ZEW (Zentrum fur Europaische Wirtschaftsforschung) Indicator of Economic Sentiment: Survey of institutional investors’ and analysts’ confidence.
  3. German IFO (Institut fiir Wirtschaftsforschung) Business Climate Index: Survey of manufacturers’, builders’, wholesalers’, and retailers’ confidence
  4. Tankan Manufacturing Index (Japan): Survey of manufacturers’ confidence.

Impact on Trade Flows

Rising Business Confidence –> Increase in Corporate Spending –> Increased Demand for Imports –> Increase in Trade Flows

Falling Business Confidence –> Decrease in Corporate Spending Decreased Demand for Imports –> Decrease in Trade Flows

Impact on Investment Flows

Rising Business Confidence –> Increase in Corporate Spending–> Increase in Corporate Profits –> Rising, More Attractive Stock Market–> Increase in Investment Flows

Rising Business Confidence –> Increase in Corporate Spending –> Rising Inflation–> Central Bank Raising Interest Rates –> More Attractive Government Debt Market –> Increase in Investment Flows

Falling Business Confidence -> Decrease in Corporate Spending –> Decline in Corporate Profits –> Falling, Less Attractive Stock Market –> Decrease in Investment Flows

Falling Business Confidence –> Decrease in Corporate Spending –>Falling Inflation –>Central Bank Lowering Interest Rates –> Less Attractive Government Debt Market –> Decrease in Investment Flows

Impact on Money Supply

Rising Business Confidence  –>Increase in Corporate Spending Rising Inflation –> Central Bank Raising Interest Rates  –>Decrease in the Money Supply

Falling Business Confidence –> Decrease in Corporate Spending –> Falling Inflation –>Central Bank Lowering Interest Rates -> Increase in the Money Supply

Impact on Investor Fear

Rising Business Confidence –> Confident Investors

Falling Business Confidence –> Nervous Investors

Typical Impact on the Currency

Rising Business Confidence –> Stronger Currency

Falling Business Confidence–> Weaker Currency

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