United States unemployment numbers are promising. For the first time in two years nearly two years the US unemployment numbers showed an 11,000 increase but a statistical revision that showed a nearly 150,000 increase jobs. What does a change in US unemployment mean for your Forex strategy and Forex trading? Will the value of the dollar continue to slide? Will an increase in US interest rates raise the value of the dollar in Forex trading?
Underlying your daily Forex trading you want to have a viable Forex strategy. To have a viable Forex strategy you need understand the forces that move the relative values in major currency pairs. A United States economy that continually loses jobs while spending on foreign products leads to a weak dollar. This does not happen in a perfectly smooth, algebraic, curve. The movements in Forex trading are better understood and explained by the mathematics of fractals and the other tools of so called Chaos Theory.
The point of this is not that you need to understand abstract math. The point is that you want to have a clear sense of what reduced US unemployment will do the value of the dollar in the coming days and over the long run. In Forex trading there are folks, perhaps like you, who trade the dollar versus other currencies in very short time intervals seeking to profit on temporary changes in the Forex market. There are also those, perhaps like you, whose Forex strategy is to buy or sell in Forex trading to hedge against loss in the business deal involving two nations and two currencies.
As the two types of traders are looking at different time frames their Forex trading may differ. Here is where in Forex trading we want to be able to think like the other guy. Anticipating how reduced United States unemployment may reflect the export of products from the USA and the need for currency hedges to cover against exchange rate loss will help us trade more effectively.
The point of a Forex strategy is to try to balance the, sometimes opposing, forces of things like United States unemployment and US interest rates. The better you understand these factors in your Forex trading the more likely you will be to understand market moves and predict where Forex trading in one of the major currency pairs might bring a substantial profit.
United States Unemployment still is around 10 percent. Despite a partial recovery of the stock markets jobs are scare and consumer spending in the US is still down. Our job in Forex trading is to know the current situation and what the experts say the future might hold based upon real numbers.
As always, do your homework, whether on United States unemployment, the Dubai financial mess, or when and if the US will raise interest rates. It is the combination of all possible situations and events that prompts moves in Forex trading. The better prepared you are with a written, and followed, Forex strategy the more likely you are to make continued profits in your Forex trading.