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 Survey: Survey 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