ForexMetrics Currency Index consists of averages of 10 baskets of currency representing Value of a single global currency, which tracks movement of individual currency as well as basket of each individual currency.
ForexMetrics Currency Index is a combination of fundamental and technical analysis specifically designed to understand and explain currency movement. It is a metrics of all global convertible currencies.
ForexMetrics Currency Index is an effective tool which tracks and explains the currency and currency pair movements in terms of Inflation, Growth, Purchasing Power Parity and Price Stability.
ForexMetrics Currency Index is a valuable tool for economist, traders, financial institutions and any individual or business involved in international trade or global businesses.
ForexMetrics Currency Index has also averages since interception in October, 2007. It is Known as "CONTINUOUS MOVING AVERAGE" (CMA)
This CMA is not only of Index, but has CMA of each individual Currencies. CMA is specially developed to understand fundaments of currency from economic cycle and technical analysis point of view.
CMA and FMCI chart explains the specifics of currency movements.
If CMA is greater than FMCI : example CMA = 1.2200 > FMCI = 1.2100
* It is to be considered as a bearish signal, that represents slow economic growth / recession / stagflation depending upon the Index reading and the differences.
* If difference between CMA and FMCI is low, this will represent inherit strength in global economic growth and increasing inflation, but global economy overall would be experiencing stagflation.
example CMA = 1.2200 > FMCI = 1.2250
* Low index reading of CMA & FMCI signifies that global economies are in recession.
example CMA = 1.1400 > FMCI = 1.1300
* If CMA and FMCI Index readings are low and the difference between CMA and FMCI is high, this explains a sudden drop and severe slow down in global economic growth.
example CMA = 1.1400 > FMCI = 1.1100
* If CMA > FMCI and readings of FMCI and CMA are high, this represents gradual economic slowdown and high inflation.
example CMA = 1.2600 > FMCI = 1.2500
* If CMA > FMCI and readings of FMCI and CMA are high and the difference between CMA and FMCI is also high, then it represents reducing economic growth and increasing inflation rate at high pace.
example CMA = 1.2900 > FMCI = 1.2500
If CMA is Less than FMCI :
It is to be considered as a bullish signal that represents economic growth / inflation / stagflation depending upon the numbers and the differences.
* If difference between CMA and FMCI is very low, it represents inherit strength in global growth and increasing inflation, but global economy overall would be experiencing stagflation.
example CMA = 1.2250 < FMCI = 1.2300
* Low index reading of CMA and FMCI signifies that global economies are experiencing slow growth with low inflation.
example CMA = 1.1300 < FMCI = 1.1400
* If CMA and FMCI Index readings are low and the difference between CMA and FMCI is high, this explains a sudden exponential rise in inflation and exponential increase in global economic growth.
example CMA = 1.1100 < FMCI = 1.1400
* If CMA < FMCI and readings of FMCI and CMA are high, then it represents increasing economic growth and rising inflation.
example CMA = 1.2500 < FMCI = 1.2600
* If CMA < FMCI and readings of FMCI and CMA are high and the difference between CMA and FMCI is also high, then it represents exponential growth and exponential increase in inflation rate, close to hyper inflation.
example CMA = 1.2500 < FMCI = 1.2900
* If CMA < FMCI and the difference is above 3%, then it represents high growth rate , but inflation is higher than growth rate which may possibly lead to negative GDP.
Notes:
Higher reading signifies global economic growth and Inflation will be determined by comparative readings.
Lower reading signifies global economic slowdown and inflationary pressure will be determined by comparative readings.
CMA and ForexMetrics Currency Index is published daily with reports and interpretations. click here for Forex Report
By Kersi Jilla of ForexMetrics.com
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