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The FX Bootcamp Guide to Strategic and Tactical Forex Trading by Wayne McDonell

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ECONOMIC ANNOUNCEMENTS

An object at rest tends to stay at rest and an object in motion tends to stay in motion until acted upon by a greater force.
—Sir Isaac Newton, First Law of Motion
 
What is a currency worth? What is its fair market value? That is the fundamental question in currency trading. If a currency is appreciating in value, you buy it. If it is depreciating in value you sell it. But how do you know if it is likely to rise or fall in value? A study of economic data is needed.
Luckily, economic data is collected by governments and released on a regularly scheduled basis. As a currency trader, you are interested in finding evidence of just one thing: inflation.
Why are forex traders interested in inflation? Interest rates. In a nutshell, this is how the global currency markets work:
Increased inflation → increased interest rates → increased currency appreciation.

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