CONSUMER CONFIDENCE INDEX (CCI)

Definition

Consumers drive economies, so a good forex broker or trader understands that consumer sentiments and trends are important factors to consider when investing.

The Consumer Confidence Index (CCI) is a monthly survey of 5,000 US consumers that asks how they feel about the current economy and financial conditions. Happy or confident consumers shop and travel more frequently, keeping the economy strong. The CCI also asks about spending patterns and how confident survey-takers are in buying expensive consumer goods. Both current opinions and future outlook are included.

A neutral CCI is around 100; numbers below 75 are considered weak, and numbers above 125 are considered strong.

FX Trading Importance

Foreign investors and forex brokers are often worried by pessimistic consumers. Such pessimism can signal a future fall in interest rates and a weakening economy, both of which greatly affect the dollar’s value in forex trading platforms.

Although economies and FX trading can be affected by sharp drops in CCI, most experts consider the correlation between spending and confidence to be minimal. Changes in the index should only be considered significant when they are at least five points. FX trading should not be otherwise affected to any really noticeable degree.