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US Interest Rate Statement

Discussion in 'Economic Indicator Descriptions' started by Felix Homogratus, Nov 3, 2009.

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  1. Felix Homogratus

    Felix Homogratus Commander in Chief

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    US interest rate statement decision comes out in the beginning of every month.

    When the economy in US is doing well, the flow of money becomes fast, and prices for goods and services start rising. This is called inflation. In order to keep inflation in check, US government raises interest rates, which means for every dollar that the banks borrow from the government, they have to pay more.

    The higher the government interest rate, the higher are the bank rates, so it becomes more expensive for people to borrow money for houses, cars, business equipment, et cetera. That cools down the economy and reduces inflation. As soon as the economy is slow, the government tries again to bring it back to normal, so it starts cutting interest rates. This means that people can borrow money from banks cheaper now, and the monthly payments on houses, cars, business equipment, et cetera, become smaller.

    When US increases interest rates, the demand for the US Dollars increases, because people from all over the world start investing into US Certificates of Deposit (CDs). Based on this, traders speculate that the price of US dollar versus other currencies will go up.

    Whenever there is an unexpected hike of interest rates, it is usually good for the US Dollar, so GBP/USD tends to go down. Whenever there is an unexpected cut or hold of interest rates, it is usually bad for the US Dollar, so GBP/USD tends to go up.

    I highly recommend you see a history of US interest rates and charts of how they affected the GBP/USD and other currencies. You can do that by visiting our calendar Forex news trading calendar with economic events analysis and currency exchange charts

    Once there, find the US Interest Rate Indicator, and click on the "File Box" on its right.

    If you want me to email you 1 day before this report is released, and explain to you in details on how to trade it, then please sign up for my free trading signals by going to this link:
    Forex Daily Trading Signals - Forex Peace Army Forum

    In the signal, I tell you exactly how many pips the currency will most likely move, depending on the difference between expected and actual numbers.
     
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