Economics play a huge role in the foreign exchange market. I enjoy looking at economic trends and trying to see how it affect currencies and life in general. I will post my thoughts and observations here. I'm throwing macroeconomics, forex trading, pop culture, and everyday life into a pot and hopefully the final product are lessons that are easy for you to consume.
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I’ve received a bunch of emails asking how China and Japan have such large foreign reserves. The simplest answer is due to international trade. Trading with the United States to be more specific. Let me give you an example: Let’s say China manufactures shoes. The United States with all their shoe-loving consumers wants to buy $1 trillion worth of shoes from China. … More…
Fed statement contains the latest decision regarding changes to US short-tem interest rate ("fed funds rate"), their take on the economic conditions that affected their decision, and important clues on what the next rate decision will be. The market goes through the statement with a fine tooth comb and magnifying glasses. One addition or deletion of a word could unlock the secret of future Fed interest rate decisions and cause the market to move hundreds of pips.… More…
Many "experts" have been blaming the dollar's current weakness due to "central bank reserve diversification". So what exactly is the central bank reserving? If you guessed acorns, you're wrong. Squirrels store acorns. Central banks store money. Most of the money are foreign currencies. If you run out of your own domestic currency, you can always print more. No need to waste space storing them.… More…
