In my last posts Fundamental Analyzes? FactorsInfluencing the Pricing On the Forex Market and Fundamental Analyzes? InflationIn Connection to Interest Rate and wage I have been writing about
fundamental analyzes and some of the factors that affects the Forex market.
In this post I will illustrate how the
unemployment rate affects the currency curve. The relationship is a
macroeconomic relationship and is based on the last two posts and the articles
Relationship Between Inflation & Unemployment Rate and the article NegativeRelationship Between Inflation & Unemployment
In this post are overviews of the affects if
the unemployment rate are low and high. The relationship between inflation and
unemployment is also illustrated. Arguments why the relationship is as
illustrated is in writing with videos in the last two posts and the mentioned
articles.
If the unemployment is low
If the unemployment is low the wages will rise.
The prices and the inflation will also rise. Interest rates will fall and the currency will be weaker.
If the unemployment is high
If the unemployment is high the wages will
fall. The prices and the inflation will also fall. Interest rates will rise and
the currency will be stronger.
The relationship between inflation and unemployment
If inflation is high demand for goods will fall
as wages is less worth. As demand for goods are less unemployment will start to
rise.
If inflation is low demand for goods will rise
as the wages value is worth more. As demand for goods are rising unemployment
will start to fall.
