How Does the US Economy Affect the US Dollar?
When a Forex trader looks to the future in trading the US dollar, he or she watches for the factors that drive the currency higher and lower against others. One of the major factors is the strength of the US economy. How does the US economy affect the US dollar? The US dollar fell in value against other major currencies the other day when US retail sales missed estimates according to NASDAQ.
The U.S. Dollar was pressured against a basket of currencies on Monday after a government report showed retail sales data for September missed economists’ expectations.
A Commerce Department report on Monday showed that U.S. retail sales barely rose in September as a rebound in motor vehicle purchases was offset by the biggest drop in spending at restaurants and bars in nearly two years.
Other factors in the dollar’s decline were the prospect of trouble with Saudi Arabia in regard to the murder of Saudi reporter by Saudi security people and tightening of US Treasury yields.
Economic Reports That Affect the US Dollar
Investopedia explains how economic factors in an expansion can cause inflation which in turn weakens the dollar and how an economic contraction can cause deflation which makes the dollar more valuable. Forex traders who follow the fundamentals look at 5 reports that affect the dollar.
A broad range of economic reports are useful when conducting research on the dollar.
Keep in mind that the actual statistics are often less important than their direction (rising or falling) and their success or failure in meeting pre-release expectations.