Macroeconomic Indicators
What does GDP stand for?
Gross Domestic Product
If a country raises interest rates, what is the likely effect on its currency value?
The currency value increases as it attracts foreign investment.
What is the main focus of news trading?
Making trading decisions based on economic data releases.
Which institution in the U.S. sets monetary policy?
The Federal Reserve.
What major event caused a sharp drop in U.S. GDP in 2008?
The Financial Crisis.
Which macroeconomic indicator measures the rate at which general prices for goods and services are rising?
Inflation Rate
What is a "flight to safety" in currency trading?
Investors move capital to safer currencies during times of economic uncertainty.
What is the trading strategy that involves entering a position immediately after a news release?
Trading the spike.
What happens to a currency if its country implements Quantitative Easing (QE)?
The currency usually depreciates due to increased money supply.
How did Brexit initially impact the British pound?
The pound fell sharply due to economic uncertainty.
What is the difference between a trade surplus and a trade deficit?
A trade surplus occurs when exports exceed imports; a trade deficit occurs when imports exceed exports.
How does high inflation affect a country's currency over time?
It typically leads to depreciation as purchasing power declines.
Why do traders monitor an economic calendar?
To anticipate market-moving events and time their trades accordingly.
How do budget deficits impact a currency’s value?
Persistent deficits can weaken a currency due to increased borrowing and debt concerns.
Why did Japan implement Quantitative Easing (QE) in 2013?
To combat deflation and stimulate economic growth.
What is the primary impact of high unemployment on a country's currency?
It weakens the currency due to economic distress.
How do central banks use interest rates to control inflation?
By raising interest rates, they reduce money supply and slow inflation.
What is the key risk of trading the expectation strategy before a news release?
The actual data may differ from the forecast, leading to losses.
What fiscal policy tool did the U.S. use during COVID-19 to stimulate the economy?
Direct stimulus payments and unemployment benefits.
What economic crisis led to the collapse of Lehman Brothers and market panic?
The 2008 Subprime Mortgage Crisis.
Name the three primary methods of calculating GDP.
Expenditure Approach, Income Approach, and Production Approach.
What is the role of the Consumer Price Index (CPI) in currency markets?
It measures inflation and influences central bank policies on interest rates.
What macroeconomic report, released on the first Friday of every month, has a major impact on forex markets?
Non-Farm Payrolls (NFP) report.
What happened to the Swiss franc when the Swiss National Bank (SNB) removed its currency cap in 2015?
The franc surged by 30% against the euro, causing market volatility.
Why did the U.S. dollar strengthen after the 2008 crisis despite initial weakness?
Investors sought it as a safe-haven currency during global economic turmoil.