http://www.forexconspiracyreport.com/how-does-the-us-economy-affect-the-us-dollar/
How Does the US Economy Affect the US Dollar?
When a Forex trader looks to the future in trading the US dollar, he or she watches for the factors that drive the currency higher and lower against others. One of the major factors is the strength of the US economy. How does the US economy affect the US dollar? The US dollar fell in value against other major currencies the other day when US retail sales missed estimates according to NASDAQ.
The U.S. Dollar was pressured against a basket of currencies on Monday after a government report showed retail sales data for September missed economists’ expectations.
A Commerce Department report on Monday showed that U.S. retail sales barely rose in September as a rebound in motor vehicle purchases was offset by the biggest drop in spending at restaurants and bars in nearly two years.
Other factors in the dollar’s decline were the prospect of trouble with Saudi Arabia in regard to the murder of Saudi reporter by Saudi security people and tightening of US Treasury yields.
Economic Reports That Affect the US Dollar
Investopedia explains how economic factors in an expansion can cause inflation which in turn weakens the dollar and how an economic contraction can cause deflation which makes the dollar more valuable. Forex traders who follow the fundamentals look at 5 reports that affect the dollar.
A broad range of economic reports are useful when conducting research on the dollar.
Keep in mind that the actual statistics are often less important than their direction (rising or falling) and their success or failure in meeting pre-release expectations.
2. When a Forex trader looks to the future
in trading the US dollar, he or she
watches for the factors that drive the
currency higher and lower against
others.
3. One of the major factors is the strength
of the US economy.
5. The US dollar fell in value against other
major currencies the other day when US
retail sales missed estimates according
to NASDAQ.
6. The U.S. Dollar was pressured against a
basket of currencies on Monday after a
government report showed retail sales
data for September missed economists’
expectations.
7. A Commerce Department report on
Monday showed that U.S. retail sales
barely rose in September as a rebound
in motor vehicle purchases was offset
by the biggest drop in spending at
restaurants and bars in nearly two
years.
8. Other factors in the dollar’s decline
were the prospect of trouble with Saudi
Arabia in regard to the murder of Saudi
reporter by Saudi security people and
tightening of US Treasury yields.
10. Investopedia explains how economic
factors in an expansion can cause
inflation which in turn weakens the
dollar and how an economic
contraction can cause deflation which
makes the dollar more valuable.
11. Forex traders who follow the
fundamentals look at 5 reports that
affect the dollar.
12. A broad range of economic reports are
useful when conducting research on
the dollar.
13. Keep in mind that the actual statistics
are often less important than their
direction (rising or falling) and their
success or failure in meeting pre-
release expectations.
15. Trade Balance
◦ Trade balance is important because
persistent US trade deficits weaken the US
dollar.
16. Nonfarm Payroll
◦ When the economy is generating more
jobs, interest rates tend go up and take
the dollar up also.
17. Gross Domestic Product
◦ GDP is a measure of the US economy and
like employment is a good predictor of
interest rates and the rise and fall of the
dollar
18. Retail Sales
◦ Strong sales indicate a strong economy
and help support a strong economy as
people are spending money. This
indicator also tells us if interest rates and
the dollar are likely to go up.
19. Industrial Production
◦ Higher industrial production indicates a
stronger economy, likelihood of higher
interest rates, and a stronger dollar.
20. As one can see from the explanations,
the value of the dollar is somewhat
self-correcting.
21. When the economy strengthens,
exports rise, and people spend more
money and inflation takes hold and
eats away at the value of the dollar.
22. The Federal Reserve raises interest
rates and the dollar strengthens until
exports weaken and the economy
weakens. Then the cycle starts all over
again.
24. The most successful Forex traders are
those who accurately predict where the
economy is going and therefore
whether the dollar will rise or fall over
time.
25. Short term prediction can be chancy
but longer term there are trends worth
considering.
27. US Economic Boom
and Bust
Rising US
Healthcare Costs
Steadily Increasing
US Debt
China Will Become
Stronger
US Dollar Will
Resume Its Long
Term Decline
Oil and Natural Gas
Prices Will Rise
The Fed Will
Manage to Control
Inflation
US Housing Market
Will Continue to
Grow
USA Will Not Involve
Itself in Any More
Ground Wars
28. The take-home lesson here for Forex
traders is that over the long term the
US dollar will decline based on the
huge US debt.
29. The offsetting factor is that if the whole
world economy goes to pot the dollar
will be the best deal of a bad lot.
30. The other “lesson” is that China has
problems with debt too and there can
be only so much growth of their
manufacturing base before they run
out of folks to sell to.
