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Macroeconomics is a branch of economics that studies general economic factors and large-scale events to predict economic behavior and decision-making of the economy as a whole. The three major concerns of Macroeconomics are employment, inflation, and National output.

General Factors Affecting Exchange Rates

Similar to any other financial price, the price of an exchange rate is determined by the forces of demand and supply. The price of an exchange rate reflects many economic and non-economic factors. The most important factors are interest rates, inflation, growth, employment, and political risk.

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Five (5) Traditional Exchange Rate Theories

The traditional exchange rate models seek the identification of an equilibrium between two economies to calculate the fair value of the exchange rate. Equilibrium is based on the relative valuation of an identical commodity, relative inflation, the relative level of real interest rates, etc.

Understanding Intermarket Analysis

Intermarket Analysis investigates the relationships between different financial markets. The following intermarket analysis focuses on four major asset classes: bonds, currencies, equities, and commodities.

INTERMARKET ANALYSIS GUIDE CONTENTS

• The Unification of Global Financial Markets

• Intermarket Analysis by John Murphy

• The Complicated Role of the US Dollar

• US Dollar and Gold Price Adverse Relation

• Crude Oil Relationships

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Forex Currency Symbols

A currency symbol is a graphic symbol that works as a shorthand for a currency's name. This shorthand is widely used in international money markets instead of using a formal currency name.

What are currency symbols in the Foreign Exchange Market?

The symbology for currency exchange rates includes a six-character symbol that consists of two exchange rates. The first three characters of the pair represent the base currency and the second three characters represent the counter currency.

• The first three characters represent the base currency
• The second three characters represent the counter-currency
• These symbols are practically unique for every country. 

Modern Monetary Theory or Modern Money Theory (MMT)

The Modern Monetary Theory is an alternative to the traditional macroeconomic theory. Generally, MMT suggests that there is no limit to the quantity of money that can be created by a central bank. The only limit comes from the impact of inflation. In short, MMT suggests that countries and governments controlling reserve currencies can borrow and spend as much as they need to achieve employment, and later, create more currency to repay their debt.

MMT Economists are focused on fiscal policies

According to MMT, governments can create new money through their fiscal policy. The government’s fiscal policy is focused on budgeting and includes:

• Taxation

• Government spending, and

• Transfer payments