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Purchasing Managers Index, or what is known as PMI, is an economic report that draws conclusions from business surveys and indicates the business climate in a certain country during a particular period. They usually survey several private companies in the country and track indicators like new orders, production, employment, supplier deliveries, etc. In this regard, PMI is often seen as more comprehensive and useful than ordinary economic data such as GDP (Gross Domestic Product).

Continue Reading at Guide to PMI Data in Forex Analysis

PMI comes on a scale of 100, with a median of 50. Any number under 50 means the economy is in contraction, while over 50 suggests business expansion. A decrease could be read as an economic decline during the period, while an increase shows ongoing recovery.

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The value of CDS used as tool for fundamental analysis is based on the sovereign CDS. The current value of sovereign CDS can be used to predict the direction of currency movement of a country in the future. The higher the CDS of a country, the higher the risks of those countries. For example, the European crisis that happened in Eurozone worried investors and market analysts. It means the crisis influenced the value of CDS. Therefore the risk of bankruptcy would increase exponentially. It is due to the lack of investor's confidence in the value of those countries' currencies.

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In the picture above, we could see 5-year CDS from Portugal, Greece, Italy, and Spain experienced sharp increases in February 2012. It showed that in medium to long-term, the crisis in Europe was still going to be the main news and could possibly crush Euro. We could see how the crisis affects Eurozone economic recovery, and consequently, the Euro.

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The employment amount depends on the jobs available. Active employees will affect the economic condition of the country significantly. The best economic condition is when there are more job vacancies available, so it will decrease the unemployed level. On the contrary, the economic contraction will cause the rise of the unemployed level that endangers the economy.

Some indicators of the employment figures are usually released in a month, and one of them is Non-Farm Payroll AS that attracts many traders' attention. The indicators determine the employment amount outside the agriculture sector as the reflection of the economic power of the United States. In other countries of major currencies such as Australia, Canada, and the Euro area, the indicator is called the Employment Change.

Continue Reading at Everything You Need to Know About Fundamental Analysis