Currencies fundamental outlook
The value of each currency has a meaningful relationship with related country economy health.and the better country’s economy,the more currency value.thus,parameters such as inflation rate,interest rate,unemployement rate,job creation rate,trade balance and budget deficit have direct effect on currency values of different countries.
Lets define each of the afforsaid parameters below:
1.inflation rate:the increase of inflation rate will lead to the increase of interest rate which strengthen the currency value.
2.Interest rate:the increase of interest rate draw investors’ attention to invest more which strengthens the currency value.
3.unemployement rate:it increases due to economic recession and weakens the currency value.
4.job creation rate:creating more jobs lead to economic boom and ultimately the increase of currency value.
5.trade balance:when exports become greater than imports.currency value increases because of economic boom and investing growth.
6.budget deficit:the increase of budget deficit that comes from depressed economy will lead to currency value decrease.
Some other parameters such as central banks’ interest rate can effectively change currency value in a controlling and planned manner.
With Asian markets opening,placing positions on Japanese yen,Australian(aussie) dollar and Newzland dollar(kiwi) could be more profitable to traders.in this market(forex) $1.5 trillion is exchanged on a daily basis and 30% of the them belong to London market.
Due to trades’ low volume,Major players use asia timeline to break Supports and resistances.
Although throughout Europe timeline,trades on Pound and Euro rocket,at the same time,trades on Asian currencies such as Japanese Yen plummet.therefore,16% of the trades are carried out during New York market opening and Pound and USD based pairs go through significant fluctuations.trading on Euro-based pairs are not recommended throughout this time.
We can undoubtedly say news related to the economic giant(united states of America)can impact on pairs significantly.
Now Lets review the significance of news related to US based on pips:
NFP(none-farm payroll):120 pips
FED’s decision about interest rate:70pips
CPI(customer price index):40pips