Currency Markets: The Four Topics You Need To Know

The four topics you need to know to make an accurate decision on the value of the currency you are planning to purchase (from Boris Schlossberg book, Technical Analysis of the Currency Market):

1. Economic growth of the country
2. Interest rates
3. Trade balance
4. Political stability

Economic Growth:

• If GDP (economic activity) is increasing in a noninflationary environment, then the currency would most likely go up

Interest Rates:

• Higher interest rates could mean a increase in the country's economic activity 
• Lower interest rates could mean a decrease in the country's economic activity
• Higher interest rates during higher inflation rates does not guarantee that the currencies value will increase

Trade Balance:

• The more a country A buy from country B, the less the value of that country A's currency (country A is essentially buy country B's currency, therefor increasing country B's currency value) 

Political Stability:

• Unstable government, unstable currency market (downward price action)
• Stable government, stable currency market (upward price action)