The economic development in the United States
Data for economic development are an important indicator for the players in the financial markets, including Forex, which (indicator) displays the State of the economy, and, therefore, the United States dollar. The most popular among traders the pair EUR/USD is very sensitive to economic data out of the United States.
Below we will explain the basic indicators of the development of the economy and their impact on the domestic currency.
A fundamental effect of economic development
As an axiom will use the assertion that the value of the currency is derived from the State of economic development of the country. If the economy is growing steadily, the interest from foreign investors willing to invest (buying the currency) will be enhanced.
Forex market uses a unified system of currency quotations via the United States dollar. That is, the United States economy and the value of the national currency will be the deciding factors, which determine the long-term direction of the market, affecting the major currency pairs. In other words, which way the dollar will go, in part depends on the direction of movement of other currencies.
The foregoing does not diminish the significance of other factors-nacbankov policy, for example. But the primary factor is the State of the economy.
Economic development data in order of importance
These indicators are published once a month or once a quarter. To keep track of the easy to use Forex economic calendar.
Level of importance (I)
Increase in trade deficit and balance of payments (Trade deficit, Payment deficit), indexes of inflation (the consumer index (CPI) and wholesale prices (PPI)) leads to a decline in the value of the dollar.
When the official discount rate and gross domestic product (GDP) of the United States dollar growth can be observed.
If there is increased unemployment (Unemployment) and increasing the money supply (M0-M4), expect a reduction of the United States dollar.
Election of the President of the country can affect the exchange rate. This figure also has a first degree of importance to the dollar.
Level of importance (II)
If you increase the value of retail sales (Retail sales), housing (Housing starts), the value of orders (Orders), and the index of industrial production (Industrial production) and economic performance (Productivity) dollar rate will increase. If market participants see an increase in producer price endeksa (Producer price), expect a reduction in United States dollar.
Level of importance (III)
The indicators are the third group of forwards and Futures currency rates, effective exchange rate and the deposit rates. Also important equity indices (Dow-Jones Index, the Nikkei, FTSE and German DAX) and prices of government bonds (known as T-bills and T-bonds) is the growth of these indicators nacvalûta also will be strengthened.
Other fundamental factors
Separate data, taking into account the economic development is to provide fundamental factors such as trade negotiations and meetings of central banks. Trade negotiators and their results (the ratio of export: import = trade deficit) is an important part of the economic policies of each country. The United States trade deficit represents a major problem over the past few years, and played a role in the reduction of the American dollar against the European currency. The results of trade negotiations is the immediate market reaction, sometimes more than significant.
Central banks of different countries to regulate domestic economic life of the country, the internal and external value of national currencies. Therefore, any meeting of the Central Bank (more precisely, meets r bočij Committee) is accompanied by the close attention of the Exchange and other market players. Adjusting (correcting) the interest rate a Central Bank stimulates or slows the growth of economies, attract foreign capital, makes it more or less attractive Government bonds, thus changes the value of United States dollar.
It is obvious that a professional trader must always take into account the economic development in its trade, responding quickly to these or other factors. It is also important to remember that the profitability of trade is highly dependent on your chosen broker!
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