The U.S. Economy And Forex Trading

Posted by Nick Niesen on October 29th, 2010

Forex trading is trading on the foreign exchange market. This market trades foreign currencies from all over the world. The U.S. Economy, as well as the global economy, plays a big part in the analysis that is done by Forex traders to help them make good investment decisions.

There are numerous reports on the U.S. and global economy that are used by investors in the foreign exchange market, and learning how to read and analyze these reports on the United States economy is important to be successful in Forex trading. There are numerous reports on the condition of the economy in the United States, and these reports reflect upon the value of the U.S. Dollar. Forex trading is based on the market value of both currencies that are being traded, so if the U.S. Dollar is weak, then you would trade them for a currency that you believe will appreciate in value. The currencies on the Forex market are quoted in pairs, and they look like this xxx/yyy, where x and y are different currencies. The first currency, or x, is the base currency, and that is what you are getting. The second currency, currency y, is called the quote, or counter, currency, and that is what is being sold in exchange for currency x.

Unemployment, housing, and numerous other economic indicators are the basis for economic reports that directly affect the Forex trading. Some of these reports include government reports like the Gross Domestic Product, which is considered the broadest measure of the economy of a country. This report represents the total market value of all services and goods that were produced by a country in a given year. The consumer price index is another report that is analysed by Forex traders to understand the condition of the U.S. economy. This report measures changes in the prices of goods for consumers in two hundred different categories. By comparing this report to U.S. exports for the same period, can be used to figure out if the United States makes or loses money on the services and products.

The U.S. economy greatly affects the Forex market. Economic indicators, such as government and private reports on different sectors of the economy, are analysed by Forex traders to anticipate whether the United States dollar will weaken or strengthen. By knowing what is happening in the U.S. Economy, Forex investors can minimize the risks and maximize the benefits. The economy of any country whose currency is traded on the Forex market will affect the market.

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