OECD Composite Leading Indicators (CLI) is a collection of indicators from 30 countries that strongly believe in the free market system. These countries hold the OECD meeting to make decisions regarding the markets which have impact on the entire region of the 30 member countries. OECD stands forte organization for Economic Cooperation and Development.

How important is it?

Since this indicator reflects the economic trends in a wide area courtesy to its thirty member countries, it is a good indicator to look up, to especially for traders with an international interest. The OECD composite leading index gives traders the global economic outlook thus making it possible to make far reaching investment decisions. If you need to import or export stuff from far off places, this is the indicator to look out for especially with respect to Europe, china, Japan and the U.S. For investors who have business interests across any of these regions, it should be a good insight into the trend of things to come. Further more, since most of the trade takes place between these member sates, they make most key decisions regarding inter trade and these agreements are mostly legally binding and would therefore affect the way transactions by investors across the region are carried out.

How is it computed?

The OECD composite leading indicator is derived from collecting leading economic indicator statistics from all the member countries and compiling the same in a percentile figure to gauge the economic trends with an aim of telling the growth or decline rate of different sectors of their economies

How does it affect forex trade?

This indicator greatly affects forex trade especially among the member states. This report clearly gives the status of the anticipated import and export trade among the member countries. It is quite easy to gauge the balance of trade between member countries from the report thus the reserve banks can easily make monetary policies basing on the report. Decisions such as tax waivers for certain goods ad products being moved across the member countries have a big influence on the forex trading between the concerned countries. The OECD decisions greatly influence the way investors carry out their businesses across the member countries. If there are glaring imbalances in the trade between member states the decisions taken at the OECD to correct the imbalance may result in the change of interest rates in the various states. This move obviously affects the forex trade among member countries.

How does it affect the stock markets?

Decisions made at the OECD obviously affect the way investors carry out their businesses. Since investors like profitable business environments, the OECD decisions will no doubt determine stock prices or even the direction of the import and export business. Think of a scenario where the business prospects in one of the member countries shows good growth potential for one reason or the other. It will automatic that some investors may opt to sell their holdings from one region with a view of investing in the more profitable region. This no doubt affects the stock prices as the demand versus supply principle take effect.