The US dollar and gold prices have both been on the rise lately, but there are two big ole’ data sets to watch before the weekend is out. One is the Purchasing Managers Index (PMI) which is a good indicator of the health of the economy as a whole. Another data set to look at is the Morgan Stanley Business Conditions Index, which measures key indicators including advance bookings, capital spending, hiring, financing and consumer sentiment.
This is not a one stop shop; you will also want to check out the ZEW Economic Sentiment Index, which is a monthly survey of investor optimism in the Euro Zone. Finally, there is the S&P GSCI(r) Light Energy Index, which provides an important benchmark for the energy commodity market. While many of these indices are not directly comparable, they provide a good overview of the state of the economy.
For an indication of how well these data sets are correlated, check out the Bloomberg Commodity Total Return Index, which represents the total return of twenty commodities, weighted to take into account their economic significance. Lastly, you might also consider the Westpac Nominal Effective Exchange Rate Index, which is a geometric average of bilateral exchange rates. By combining these three data sets, you should have a good feel for how the dollar is presiding over the global economy. In the end, what matters most is how you feel about your dollar compared to other major currencies, which is why the US Dollar Index (DXY) is a must-have investment.
