Let’s take a closer look, four factors affecting the change of currency rate movement.
The capital market is the most visible indicator of a country’s economic health related. Strengthening or the fall in the stock market of the country is usually the economic signals in the eyes of investors.
Forex traders rely heavily on economic data that in many cases the same economic data will have an influence on market movements.
The level of trade between countries representing a request for goods or services of a country. The higher the demand will typically have an impact on strengthening the country’s currency. Example: to buy goods from Australia, an importer who came from outside Australia should convert their currency into Australian dollars (AUD). It will also increase the demand for the AUD, so it will give effect to the strengthening of the AUD.
Surplus and deficit balance of trade is an example of economic data of a country in terms of international trade. If the surplus increases – or decreases the deficit – then the country’s currency will usually be strengthened. Conversely, if the reduced surplus – or deficit increases – it is usually the country’s currency will weaken.
The political situation of a country also plays a major role in the country’s economic prospects and will have an impact on its currency. Forex traders will continue to monitor the news and political events to gauge the economy associated with currency.
An election is a great event for the currency. The exchange rate strengthened if the parties have a program and a good influence for the economy came out as the winner of the election. In short, if the election winner is the one who “converted” by the market, then the country’s currency will strengthen.
The fiscal and monetary policy of the government is the most important factor in economic decision making. The central bank’s decision on interest rates that the sharp impact also affects the forex market.
Report economic calendar is very important when prices move fast in the market. The report on the GDP (Gross Domestic Product) or GDP (Gross Domestic Product) is perhaps the most obvious economic data because it is the basis of a country’s economic strength.
Inflation is also a very important indicator because it is an indication of an increase in prices and purchasing power. However, inflation is a double-edged sword where often there is pressure on the currency when purchasing power declines. On the other hand, it can also lead to currency appreciation because it may force the central bank to raise interest rates in order to control inflation.
Other reports such as the employment sector also carry important information about the economic power of a country. One sector data jobs