Index Tankan – One of the Most Important Japanese Economical Forex Indicator

japaneese yenJapanese trading session is very important and powerful in Forex trading. Asian economy including Singapore is very influenced by Japan. Singapore Forex traders should pay much attention on the Japanese economical news and Forex indicators.

Index Tankan is one of the most important economical Forex indicators in Japan. This indicator is used to describe the business environment in the country. It shows the most accurate situation of the industry sector in large-scale production. Tankan includes such data as the country’s orders, production, employment, inventories and prices for exports and imports.

With this best JPY Forex indicator an online trader can make a prediction on the volume of industrial production, determine the index of producer prices, order volumes of industrial enterprises, employment, as well as calculate the values of other macroeconomic indicators of the Japanese economy. Tankan covers all sides of the economy, not only the Japanese islands, but also affects the whole Pacific region. The first report on the index was launched in 1957.

The growth of this Forex indicator shows the acceleration of growth of Japanese economy. Together with the increase of Tankan the country’s GDP will increase too, which is a good signal.

Tankan and other indices such as the PMI (index of optimism of purchasing managers) and ISM (Institute of Management index of supplies, Institute for Supply Management) are very close to each other, because the Tankan also allows you to define the situation of the Japanese business prospects for growth. The indices differ only in the calculation algorithms.

Tankan index is calculated and published by the Department of Statistical Research of the Central Bank of Japan once per quarter. It is measured in basis points. It includes the data of 9000 enterprises, which are divided into four main categories: major, large, medium and small. The evaluation of the enterprises is carried out by the following economic characteristics:
1. working conditions in terms of business
2. Sales and production
3. Supply and demand, price levels
4. Profit
5. Direct investment and production capacity
6. Employment
7. Terms of taxation.

Considering these indicators, the Bank of Japan carries out the calculation of the so-called diffuse indices:
1. The quality of business conditions
2. Sufficiency of the demand conditions, inventory levels, production capacity and employment
3. Financial conditions for businesses.

Despite of some subjectivity of the Tankan, the index has a very strong forecasting ability and good correlation with the basic parameters of the economic cycle. JPY is always very responsive to the release of this free indicator. This is one of the best Forex indicator for Singapore Forex traders to trade JPY against other currency pairs.

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