What affects the quotes of the US dollar?

The US dollar is the most famous and sought-after currency in the Forex market. He simultaneously acts as himself and as a currency of refuge. An effective transaction involves the ability to build the correct forecast of the likely future direction of the USD price for any of the currencies. In this case, the trader will need to analyze the fundamental events.

What exactly events can have an impact on the US dollar? Such events can be both events within the country and those taking place outside of its borders. Internal factors include economic, political, financial and weather events. At the same time, the country's participation in military conflicts, the prices of oil and precious metals (especially gold), trust, belong to external factors. And because these factors directly have a great influence on the price movement of the US dollar, it is worth analyzing them in more detail.

External Events

Confidence in the currency. The US dollar is trusted by large participants in the currency market. At the same time, large investors from time to time refrain from using the US dollar in settlement deals when concluding transactions. For example, Norway decided in its calculations to use not the dollar, but the euro. Such a loss of trust threatens to lower the rate of the US currency in the international currency market, and sometimes because of this, there may be a danger of a collapse of quotations.

Oil and gold price fluctuations. Changes in prices for these goods are also fundamentally capable of affecting the USD. The increase in prices for oil and gold initiates a decline in the price of the US dollar, because the United States is a major consumer of these products.

Participation in military conflicts. The dollar can seriously move depending on how well the United States is involved in those or other military conflicts. Even the rumors that the USA plans to enter into a military confrontation can have a tangible impact on the quotes.

It is the turn to analyze internal events that could affect the quotes of the US currency.

Economic data. The state of the national economy is an important element in the formation of the USD direction. At the same time, not all indicators need to be taken into account, because there are a lot of them and many of them do not have a serious impact on the currency, or their influence is very weak.

It makes sense for a trader to track events and data which have the greatest weight. These include the following macroeconomic indicators: a country's GDP, consumer and industrial price indices (which serve as a mirror of inflation), unemployment, payment and trade balances. To make it more comfortable to track, an economic calendar was formed that collected all the significant events, the day and time of their publication, previous values, and also forecasts for any of the listed indicators. There is also a Forex news indicator, which can be set on a chart.

Financial performance. It indicates the state of the banking sector in the United States, and how stable economic institutions operate. Financial indicators include refinancing rates, interest on government bonds and money supply. The interest rate of the Federal Reserve System (FRS) influences USD quotes very much. There is a direct relationship between them: if the interest rate increases, the dollar increases, if the rate decreases, the dollar becomes cheaper.

The political factor. Political news also have a great influence on the rate of the American currency, as such events can cause changes in the economy. This involves different views of politicians on economic programs.

Cataclysms and natural phenomena. The currency market gives a powerful response to natural phenomena such as floods, hurricanes, etc. In addition, the exchange rate may change in connection with acts of terrorism, similar to the one that happened on September 11 in New York, when the dollar collapsed as a result of the terrorist attack.

Thus, knowing the main factors and principles of their impact on the US dollar, the trader will be well-armed enough to conduct successful trading with this currency.