What is the U.S Consumer Price Index (CPI)  

The U.S Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI is widely regarded as one of the most important economic indicators in the United States as it measures the rate of inflation, which is a key factor in determining the state of the economy. The CPI is compiled monthly by the Bureau of Labor Statistics (BLS) and is used by policymakers, economists, and investors to track changes in the cost of living and make informed decisions. 

What are the various categories of Consumer Price Index (CPI)  

The Consumer Price Index is comprised of various categories, each with its own weight in the overall index. The major categories of the CPI include food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. The weights assigned to each category reflect the relative importance of each category in the spending habits of consumers. For example, housing typically has the highest weight in the index, reflecting the fact that it is the largest expense for most households. 

Why is the CPI important  

The CPI is important because it is used to monitor inflation, which is a key economic indicator. Inflation can erode the value of money and impact the purchasing power of consumers. As such, policymakers use the CPI to make informed decisions about monetary policy, including setting interest rates. Investors also use the CPI to monitor inflation and adjust their investment strategies accordingly. Additionally, the CPI is used to adjust payments for various government programs, such as social security and other entitlements. 

What goes into the Consumer Price Index  

The CPI tracks the prices of a wide range of goods and services, including food, housing, clothing, transportation, medical care, recreation, education, and communication. The index includes more than 200 categories of goods and services, which are further divided into subcategories.  

For example, the food category includes subcategories such as meat, dairy, fruits and vegetables, and nonalcoholic beverages. The housing category includes subcategories such as rent, homeownership costs, utilities, and household furnishings.  

The transportation category includes subcategories such as gasoline, public transportation, and vehicle insurance. The CPI also considers the frequency of purchase and the relative importance of each item to the average household. The Bureau of Labor Statistics, which is responsible for compiling the CPI, surveys thousands of households to determine their spending patterns and then uses this information to weight the various goods and services in the index. The resulting CPI is a valuable tool for policymakers, businesses, and consumers in understanding inflation and making informed decisions about the economy. 

Where can you find the Consumer Price Index  

The Consumer Price Index is released by the Bureau of Labor Statistics monthly. The release schedule for the CPI is typically announced several months in advance and is available on the BLS website. The CPI is also widely reported in the media and can be found on numerous financial news websites. Additionally, investors and economists often track the CPI using specialized software and data services, which provide more detailed analysis of the index and its components. 

What is the Consumer Confidence Index 

The Consumer Confidence Index (CCI) is a survey-based economic indicator that measures the level of optimism that consumers have in the economy. The CCI is released monthly and is closely watched by economists, investors, and policymakers as an important gauge of the health of the U.S. economy. 

Understanding how the Consumer Confidence Index works 

The CCI is compiled by the Conference Board, a non-profit research organization. The CCI is created through a survey of a random sample of 5,000 households across the U.S. Respondents are asked questions about their perceptions of current business and labor market conditions, as well as their expectations for the future.

5 ways the Consumer Confidence Index affects you 

The CCI has significant implications for consumers, businesses, and policymakers.

Here are five ways that the CCI can affect you: 

Consumer Spending: When consumers are confident in the economy, they are more likely to spend money on goods and services, which can help drive economic growth. 

Business Investment: If businesses perceive that consumers are confident in the economy, they may be more likely to invest in their operations, which can help create jobs and drive economic growth. 

Interest Rates: The CCI can also influence the actions of the Federal Reserve. If the CCI shows that consumers are optimistic about the economy, the Fed may be more likely to raise interest rates to prevent inflation. 

Stock Market: The CCI can also impact the stock market, as investors may buy or sell stocks based on their perceptions of the economy as indicated by the CCI. 

Job Market: The CCI is closely watched by policymakers as an important indicator of the health of the labor market. When the CCI is high, it can signal that consumers are more likely to be optimistic about job prospects, which can help drive employment growth. 

Why Is the Consumer Confidence Index Important 

The significance of the Consumer Confidence Index lies in its ability to reflect consumer sentiments regarding the current state and future trajectory of the economy. Administered by the Conference Board, the index comprises five questions concerning the current economic situation and three questions pertaining to future expectations. It offers valuable information on consumer spending and saving patterns, which can aid businesses and economic leaders in monitoring inflation and output levels. 

Where can you find the Consumer Confidence Index 

The Conference Board releases the CCI on the last Tuesday of every month at 10:00 a.m. ET.

The CCI is on the Conference Board’s website, financial news websites and platforms. Additionally, many financial institutions provide their own analysis and interpretation of the CCI, which can clarify the implications of the index for the broader economy. 

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Highly anticipated economic reports are set to be released this week, including the Bank of England Rate Statement, US Consumer Price Index (CPI), and US Producer Price Index (PPI). These reports are vital, providing traders and investors with essential data and ensuring they stay ahead of the dynamic market.

Consumer Price Index | US (10 May)

CPI in the US rose by 0.1% in March 2023, showcasing a slowdown in increment from February’s 0.4% increase.

According to analysts, the CPI reading for April—which will be released on 10 May—is expected to rise by 0.3%.

Takeaway: Following the negative market reaction to the Fed rate decision, the market will now be closely watching the Consumer Price Index. If the results align with the forecast, we can anticipate a slight boost to the US dollar.

Bank of England Rate Statement | UK (11 May)

During its March 2023 meeting, the Bank of England raised its key bank rate by 25bps to 4.25%, with the objective of bringing inflation back to the 2% target. 

Some analysts expect the next rate hike will be by another 25bps to 4.50%.

Takeaway: Based on last month’s hawkish inflation and wage data, the Bank of England is expected to implement another 25 basis-point rate hike. However, due to recent comments by the bank on the delayed impact of prior tightening measures, the criteria for further actions have increased. Unless there is negative economic news in the next few weeks, we predict that there will be no further adjustment in June.

Producer Price Index | US (11 May)

Producer prices for final demand in the US decreased by 0.5% month-on-month in March 2023, the largest drop since April 2020. 

The PPI data for April will be released on 11 May, with analysts expecting an increase of 0.3% from the previous month. 

Takeaway: Following the negative reaction of the market to the Fed rate decision, the focus now shifts to the Producer Price Index. If the result aligns with the forecast, we can anticipate a slight boost for the US dollar.

Gross Domestic Product | UK (12 May)

The UK economy experienced a halt in February 2023, after achieving upward growth of 0.4% in January. 

The GDP figures for March, due to be released, is expected to show an increase of 0.1%.

Takeaway: The Bank of England will rely on the latest UK GDP figures to help determine their next interest rate decision. The release of this data, if it’s in line with expectations, could potentially slow down the GBPUSD exchange rate. However, it could also signal the central bank to keep the interest rate unchanged in the next meeting.

Prelim University of Michigan Consumer Sentiment | US (12 May)

The University of Michigan’s US consumer sentiment came in at 63.5 in April 2023, up from 62 in March.

For May, analysts expect a reading of 64. 

Takeaway: The market closely watches consumer sentiment as it serves as an indicator of the public mood in the US. If the data release meets the forecast, we may see a boost for the US dollar.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com

Sydney, Australia, 3rd May 2023 – VT Markets, a leading online trading platform, has announced the launch of its highly anticipated King of the Hill Trading Contest. The contest will run from 1 May to 31 July 2023, granting the world’s best traders an exclusive chance at global recognition.

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For more information, please visit our website or email media@vtmarkets.com.

This week, market participants await the release of highly awaited economic reports, which will highlight key indicators such as Rate Statements in the US and Australia, as well as Employment Change in the US and Canada. These reports have immense significance as they enable traders and investors to make informed decisions and stay ahead of the market. 

ISM Manufacturing PMI | US (May 1)

The US ISM Manufacturing PMI fell to 46.3 in March 2023, the lowest since May 2020.

Analysts expect a reading of 46.6 for April 2023. 

Reserve Bank of Australia Rate Statement (May 2)

During its April meeting, the RBA held its cash rate steady at 3.6%, in line with market expectations. This marks the first pause in the current hiking cycle, which began in May 2022. 

For April, analysts expect the central bank to keep the rate unchanged at 3.6%. 

ISM Services PMI | US (May 3)

The US ISM Services PMI dropped to 51.2 in March 2023 from 55.1 in February 2023, the slowest growth in three months. 

For April, analysts expect a reading of 50.6.

FOMC Meeting and Funds Rate | US (May 3)

The Fed raised its funds rate by 25bps to 5% in March 2023. 

Despite a slower inflation rate, analysts anticipate that the central bank will continue to raise interest rates, with another 25bps hike to 5.25% in April 2023. 

European Central Bank Main Refinancing Rate (May 4)

Most ECB policymakers agreed to raise key interest rates by 50bps to 3.5% last month, though some members would have preferred not to increase them until the financial market tensions had subsided. 

The ECB is set to deliver a 25bps rate hike in its May meeting, with further increases expected to be implemented in subsequent meetings.

Employment Change | Canada (May 5)

The Canadian economy added 35,000 jobs in March 2023, while the unemployment rate remained unchanged at 5% for the fourth consecutive month. This is near the record low of 4.9% seen in June and July 2022. 

For  April  2023, it is anticipated that job creation numbers will drop slightly to 25,000. The unemployment rate is expected to be at 5.1%.

Employment Change | US (May 5)

The US economy created 236,000 jobs in March, the least since December 2020. Meanwhile, the unemployment rate edged down to 3.5% in March 2023.

Analysts expect the US to create 190,000 jobs in April 2023, while the unemployment rate will be at 3.5%. 

Dear Client,

Please note that the component stocks in the stock index spot generate dividends. When dividends are distributed, VT Markets will make dividends and deductions for the clients who hold the trading products after the close of the day before the ex-dividend date.

Indices dividends will not be paid/charged as an inclusion along with the swap component. It will be executed separately through a balance statement directly to your trading account, the comment for which will be in the following format “Div & Product Name & Net Volume ”.

Please note the specific adjustments as follows:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com

Market participants anticipate several critical economic reports this week, including the BOJ Rate Statement, US Advance GDP, and Core PCE Price Index. These key reports will provide valuable insights and help investors and traders make informed decisions. Don’t miss out on this opportunity to stay ahead of the curve.

Here are the key events to watch out for:

Consumer Price Index | Australia (April 26)

The annual inflation rate in Australia rose to 7.8% in Q4 2022 from 7.3% in Q3 2022. 

For Q1 2023, analysts expect a more moderate increase of 6.8%.

Advance GDP | US (April 27)

The US economy expanded at an annualised rate of 2.6% in Q4 2022. 

For Q1 2023, analysts predict a rate of 2.3%.  

BOJ Rate Statement | Japan (April 28)

During its March meeting, the Bank of Japan unanimously voted to keep its key short-term interest rate at -0.1% and the rate for 10-year bond yields at around 0%.

This month, analysts expect that the rate will stay the same as the board introduces new quarterly growth and price estimates in Kazuo Ueda’s first policy meeting.

Prelim Consumer Price Index | Germany (April 28)

Germany’s consumer price inflation reached a seven-month low in March 2023, recording a year-on-year rate of 7.4%, down from 8.7% in the previous two months. The figure remained well above the European Central Bank’s target of 2%. 

Analysts predict a further decrease in April 2023, with an expected rate of 7.0%.

Gross Domestic Product | Canada (April 28)

Canada’s economy jumped 0.5% in January 2023, following a slight contraction of 0.1% in December 2022. 

For February, analysts expect it to increase by 0.3%.

Core PCE Price Index | US (April 28)

Core PCE prices in the US, which exclude food and energy, rose by 0.3% month-on-month in February 2023, following a downward revision of 0.5% in the previous month.

For March 2023, analysts expect a 0.4% increase. 

Employment Cost Index | US (April 28)

Compensation costs for civilian workers in the US rose 1% in Q4 2022, a third straight slowdown, compared to a 1.2% increase in the previous quarter.

For Q1 2023, analysts expect the index to rise by 0.8%.

Dear Client,

Please note that the component stocks in the stock index spot generate dividends. When dividends are distributed, VT Markets will make dividends and deductions for the clients who hold the trading products after the close of the day before the ex-dividend date.

Indices dividends will not be paid/charged as an inclusion along with the swap component. It will be executed separately through a balance statement directly to your trading account, the comment for which will be in the following format “Div & Product Name & Net Volume ”.

Please note the specific adjustments as follows:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com

What Are Retail Sales? 

Retail sales refer to the total amount of merchandise or goods sold to customers by a retailer. This can include a wide range of items, such as clothing, electronics, furniture, and more. Retail sales are an important indicator of the health of the economy, as they represent consumer spending, which accounts for a significant portion of overall economic activity.

In the United States, retail sales are closely monitored and reported by the government and other organizations as a key economic indicator. 

Understanding Retail Sales 

Retail sales data gives insights into customer behavior and buying habits. Retailers use it to make informed decisions about inventory, marketing, and pricing. Analyzing data also helps identify trends and changes in consumer preferences. This information is critical for product development and market expansion.

Additionally, retail sales data can be used by investors, policymakers, and economists to assess the overall health of the economy and make predictions about future growth and performance. 

How Is Retail Sales Data Calculated

Retail sales data is typically collected through a combination of surveys, point-of-sale (POS) systems, and other sources. The U.S. Census Bureau conducts a monthly survey of retail establishments to gather information on sales and inventory levels. This survey includes both brick-and-mortar stores and online retailers and covers a wide range of product categories.  

In addition to the survey data, the Bureau of Economic Analysis (BEA) also incorporates data from POS systems and other sources to create a comprehensive estimate of retail sales for a given period. 

How Does Inflation Impact Retail Sales

Inflation can have a significant impact on retail sales, as it affects the purchasing power of consumers. When prices rise due to inflation, consumers may be less likely to make discretionary purchases and may focus on purchasing only essential goods. This can lead to a decline in retail sales, which can have a ripple effect on the economy as a whole.  

On the other hand, low inflation can stimulate retail sales by making goods more affordable for consumers. Understanding the relationship between inflation and retail sales is critical for retailers, investors, and policymakers to make informed decisions about pricing and economic policies. 

Why Are Retail Sales Important

Retail sales are important for the economy because they show how much consumers are spending, which is a big part of economic activity. When retail sales are strong, it is usually a good sign for the economy because it suggests that consumers are confident and that the economy is growing.

Conversely, weak retail sales can be a sign of economic contraction, as consumers may be less willing to spend money during times of uncertainty or financial strain.  

Retail sales data is also closely watched by investors, as it can provide insights into the performance of individual companies and industries.