last part tips and tricks basics of forex

3. Indicators of the Business Cycle

Economists use three types of indicators that provide monthly data on the movement of the economy as the business cycle enters different phases: leading, coincident, and lagging indicators.

4. The business cycle's effect in Forex

As the economy moves through the different phases of the business cycle, the FOREX market reacts to these changes. Investors view these changes and take corresponding action, attempting to take advantage of changes in the economy.

In the FOREX market, the US Dollar will move inversely to interest rates. As interest rates increase, there will be a drain on earnings, resulting in a decline in the US Dollar Index.

5. Monetary Policy

Monetary policy attempts to control the supply of money and credit in the economy. This will affect interest rates causing an increase or decrease in economic activity. The primary focus of monetary policy is the control of inflation.

6. The activity of the Federal Reserve System (FRS)

The FRS implements monetary policy in the US. An Act of Congress established the Federal Reserve System, the nation’s central bank, in 1913. The Act divided the country into 12 Federal Reserve districts. Responsibility for coordination the activities of the district banks lies with the Federal Reserve Board of Governors in Washington D.C. The board has seven members appointed by the President and confirmed by the Senate.