Following the Fundamentals Flashcards
what does ‘local economy’ refer to?
inflation/deflation and employment/unemployment
what does ‘central banks’ refer to?
interest rates (dovish/hawkish statements), quantitative easing, capital controls etc
what does ‘politcal stability’ refer to?
elections, referendums and military conflicts
what does ‘natural disasters’ refer to?
tsunamis, volcanic eruptions, earthquakes etc
what are the four ‘market moving events’ categories in the forex market?
local economy
central banks
political stability
natural disasters
what is inflation?
inflation refers to a general increase in prices of services and goods
what is inflation a byproduct of?
inflation’s a byproduct of a rising economy
what does CPI stand for?
consumer price index
what does ‘unemployment rate’ portray?
unemployment rate shows the total workforce of a nation that is unemployed during the relevant timeframe
is unemployment rates being high good or bad for the economy?
bad
unemployment rate increase = less people working = currency value decreases
imports < exports good or bad for the economy?
good
when a country imports less than what it exports, it results in a trade surplus which increases demand for the currency
imports > exports good or bad for the economy?
bad
when a country imports more than what it exports, it results in a trade deficit which decreases demand for the currency which devalues it
what is importing and exporting?
importing = purchasing goods from overseas
exporting = selling goods overseas
why do politicians promote supporting locally made products?
because importing more goods than exporting goods results in a decrease in currency value
who controls interest rates?
central banks
