Reasons affecting the US dollar exchange rate
There are many reasons why the exchange rate of the American dollar decreases or, conversely, increases; you need to know them if you are in one way or another connected with this currency, and especially if you trade on Forex.
Fundamental Forex analysis is simply unthinkable without knowledge of these factors.
The US dollar is one of those currencies whose exchange rate is affected by literally everything, from the direct impact of news from the stock markets to the publication of data on the state of the economy of the United States of America.
If you keep track of the appearance of a new message regarding the American currency in time, you can make good money or simply save your existing capital from shocks.
Upon closer examination, the dollar no longer seems to be such a stable currency as most economists imagine it to be.
Economic, financial and political reasons.
The US dollar, like any other currency in the world, reacts sensitively to any events within the country; its value is particularly influenced by the state of the US economy and the banking system. Any changes in this area are reflected in the news, thanks to which you can find out what awaits the dollar in the near future.
Particular attention should be paid to the publication of such data as:
1. Inflation indicator - more often than not, it is not the indicator itself that is published in the news, but data on prices for real estate, industrial and consumer goods. An increase in the inflation rate causes a depreciation of the dollar, and positive data causes the strengthening of this currency.
2. Employment and unemployment - an increase in the unemployment rate always indicates a deterioration in the economic situation in the country, which entails a weakening of the national currency.
3. Trade balance - the more goods a country exports, the higher the exchange rate of its national currency, therefore a change in the trade balance indicator, which indicates the ratio of imports to exports, always has a strong impact on the current price of the currency.
A positive balance causes an increase in the dollar exchange rate, and a change in the negative direction almost always causes a downward trend in Forex.
4. The Federal Reserve discount rate is the most significant tool for managing the money supply within the country. A decrease in the discount rate indicates the availability of more available credit resources and negatively affects the exchange rate of the US dollar; a statement about an increase in the discount rate has the opposite effect.
5. Emission of money supply - a running printing press always indicates the entry into circulation of an unsecured money supply; the last time this happened was in September 2012 and caused a weakening of the dollar against the euro by almost 1000 points.
External factors.
In addition to internal reasons, the dollar exchange rate is also subject to external influences.
1. Oil price - its decline helps to strengthen the US dollar, and a sharp increase in the price of oil can literally cause a collapse of the American currency.
Oil trading - http://time-forex.com/pary/neft-na-forex
2. Gold – here we also track the inverse relationship between the cost of gold and trends in the Forex currency market for the American dollar, when gold rises in price, the dollar becomes cheaper and vice versa.
Gold trading - http://time-forex.com/pary/torgovly-zolotom
3. Euro - strengthening of the euro, plays negatively in relation to the US dollar exchange rate, investors' funds migrate to the European currency, which causes an increase in the supply of the dollar on the Forex currency exchange, and therefore a decrease in the exchange rate.
4. External debts - America owes almost everything, so reports about the growth of US external debt always negatively affect the exchange rate of this country.
In addition, any statements by world leaders regarding the situation in the United States, criticism of the political course of this country and other statements can also play a negative role.