EVERYTHING ABOUT FOREX
THE LINK BETWEEN INTEREST RATES AND CURRENCY PRICES
Interest rates is one of important factors affecting a country’s currency prices. Example: European Central Bank (ECB) holds interest rates steady, as the US Federal Reserve (FED) increases the interest rates the American dollar rises and EUR/USD currency pair decreases.
Similarly, as the TCMB reduces the interest rates, depreciation of Turkish lira causes an upward movement in the USD/TRY currency pair.
THE LINK BETWEEN GDP AND CURRENCY PRICES
Changes in GDP are the important macroeconomic indicative of a country’s development or decline. The growth in GDP in a country means an increase of its monetary value while the decline expresses a loss of value of the country’s monetary unit.
In the United States, the growth in GDP compared to its previous annual figure, may cause an increase in the value of the US dollar and lead to a depreciation of euro in the EUR/USD currency pair.
THE LINK BETWEEN THE UNEMPLOTMENT RATE AND CURRENCY PRICES
Unemployment rate is an important indicator of economic trend therefore any changes directly affect the value of a currency. Example: In the United States, a decrease in the unemployment rate compared to its previous annual figure, may cause an increase in the value of the US dollar while a rise in unemployment will lead to a depreciation of the USD.
In the period of a high unemployment rate in the United States an upward movement can be seen in the EUR/USD currency pair.
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