EXPORT AND IMPORT DATA

Import and export information for large consumer and producer countries affects every market: the stock markets rise or fall based on the prospects of producing companies, the Forex markets respond to what the information shows about the strength of a domestic economy, and commodity markets swing wildly based on what the information demonstrates about demand for raw materials. That’s why it’s essential for binary option traders to make sure that they keep their eye on import and export information.

The effect that import and export data have on the Forex markets is perhaps the most subtle, and most intriguing, of the fundamental relationships. Large producers and consumers can drastically affect currency value based solely on their import and export activity. This is because when buying or selling to another country the home currency of the producer is generally used. For example, one can imagine an enormous car manufacturer in the United States selling $5 billion worth of automobiles to the United Kingdom. In order to purchase that order, the importer in the United Kingdom will have to exchange a comparable amount of Pounds (GBP) into US Dollars (USD). This in turn will shift the supply/demand equation radically.

Import and export data from the world’s developing economies also have a huge impact on the commodities markets. This is because these countries consume a highly volatile and sometimes massive amount of raw resources – as opposed to established economies, which tend to consume roughly the same amount year to year, with a regular growth rate. When a country like India or China releases export data that shows a massive spike, the price of commodities such as Steel, Oil, and Gold may all skyrocket, as the nations’ demands for the raw materials needed to increase production levels will grow. Similarly, when export data shows a slowing of production, the commodities markets tend to get spooked, as a slowdown in any of the major growth economies could seriously impact global demand for underlying resources.