My previous forex experience was filled with losses that I attribute due to my sole focus on technical analysis. Now, I think I've got an idea of what drives the rates of exchange between currencies. I'm approaching things from a fundamental POV and profit is starting to look good currently.
The following factors are what influences the value changes between currencies.
The following factors are what influences the value changes between currencies.
- Balance of payments (If a country is in a deficit the domestic currency will weaken)
- Interest Rates (Strengthens Currency)
- Inflation (Weakens Currency) (Though, may sometimes strengthen due to anticipation of higher interest rates brought on by central bank)
- GDP, employment levels, retail sales, capacity utilization, etc. (Strengthen if healthy economy and vice versa)
- Government Market Intervention (Depends if exchange rate is harming economy and/or trade)
- Economy Productivity (Strengthens if high productivity)
