Upload
investingtips
View
101
Download
1
Tags:
Embed Size (px)
DESCRIPTION
http://www.forexconspiracyreport.com/inflation-and-currency-trading/ Inflation and Currency Trading The basic relationship between inflation and currency trading is that all currencies tend to inflate and devalue over time. It is a basic fact of governance that a little bit of inflation makes people happy as it seems to make their property more valuable with time. A lot of inflation gets noticed and tends to cause havoc in a nation’s economy. A high level of inflation affects how people plan their economic lives, make purchases, and save for the future. The basic relationship of inflation and currency trading in foreign currency rates in that the nations that best manage their economies end up with more valuable currencies over time. The basic fact for foreign currency traders in dealing with inflation and currency trading is that betting against a steadily inflating currency is often profitable. National Policy and Currency Management Despite the fact that most nations would just as soon not see their currency inflate and devalue, economic and political realities often dominate. If a nation’s balance of trade is constantly negative it leads to a devaluation of their currency versus other currencies. This is seen in the home nation as inflation as more of the local currency is needed to buy a house, car, or loaf of bread. When nations seek to remedy their balance of payments such an action often requires reducing the government’s budget and this means less money in circulation. People often get angry and vote for the opposing party in the next election. This is a simple concept but one that traders must keep in mind when dealing with inflation and currency trading. Foreign currency exchange rates between the United States and Japan moved steadily in favor of Japan for years and years as the USA struggled unsuccessfully to manage its ever mounting budget deficit and balance of payments deficit. Keeping an eye on politics and trade figures is useful in trading one currency versus the other.
Citation preview
By www.forexconspiracyreport.com
Inflation and Currency Trading
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
The basic relationship between inflation and
currency trading is that all currencies tend to inflate and devalue over time.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
It is a basic fact of governance that a little bit of inflation
makes people happy as it seems to make their property more valuable with time.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
A lot of inflation gets noticed and tends to
cause havoc in a nation’s economy.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
A high level of inflation affects how
people plan their economic lives, make purchases, and save
for the future.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
The basic relationship of inflation and currency
trading in foreign currency rates in that the nations that best manage their economies
end up with more valuable currencies over
time.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
The basic fact for foreign currency traders in
dealing with inflation and currency trading is that
betting against a steadily inflating currency is often
profitable.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
National Policy and Currency
Management
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
Despite the fact that most nations would just as
soon not see their currency inflate and
devalue, economic and political realities often
dominate.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
If a nation’s balance of trade is constantly negative it leads to a devaluation of their
currency versus other currencies.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
This is seen in the home nation as
inflation as more of the local currency is
needed to buy a house, car, or loaf of
bread.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
When nations seek to remedy their balance of payments such an action often requires reducing
the government’s budget and this means less money in circulation.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
People often get angry and vote for
the opposing party in the next election.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
This is a simple concept but one that traders must keep in mind when dealing with inflation and currency trading.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
Foreign currency exchange rates between the United States and Japan moved steadily in favor of Japan for years and years as the USA struggled unsuccessfully to
manage its ever mounting budget deficit and balance of
payments deficit.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
Keeping an eye on politics and trade figures is useful in
trading one currency versus the other.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
A Rising, or Falling, Tide Affects Nearly
All Ships
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
When we consider the US dollar and the
Yen we commonly concern ourselves with the balance of payment between the two nations.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
We also concern ourselves with
monetary policy, especially that of
Japan.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
Japan has purchased US dollars for years in an
attempt to keep the Yen from getting too strong as an
overly expensive Yen would make Japanese imports into
the USA too expensive.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
However, there are outside factors that
drive both currencies and relate to inflation and currency trading.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
And, these factors do not always affect
both nations equally. When the price of oil rises it affects Japan
and the Yen more strongly.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
Japan imports all of its oil and imports
even more not that it is shutting down
nuclear reactors in the wake to the recent tsunami.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
The USA is a major oil producer and, with
the advent of fracking technology, may indeed become energy self-sufficient in a decade or so.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
This will serve to drive down inflation
in the USA.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
The inflation and currency trading
equation could move strongly in the favor of the USA over time.
http://www.forexconspiracyreport.com/inflation-and-currency-trading/
Where this may most strongly apply is in Forex trend trading.