Finance

Currency strength drivers

According to Investopedia, 6 factors influence currencies exchange rates. Those factors are:

  • Inflation
  • Interest rates
  • Current account deficits (meaning that the country is spending more on foreign trade than its earnings)
  • Public debt
  • The term of trade which is export:import prices ratio
  • Economic performance

Trade currency strength

According to Avatrade, major economic events should be tracked insofar as they have a significant impact on currencies exchange rates. Such economic events include:

  • Central banks meeting and interest rates decisions
  • GDP
  • CPI (customer price index)
  • Unemployment rate and employment change
  • The balance of trade
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