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Exchange rate decision theory and economic data interpretation (five)

2023/2/24 19:27:41  Classification:   Participation: 6  

five rebatesinforex rebatemeaninginforex overshoot best forex rebategtheory by the American econom cashback forext Rudiger-Dornbusch (RudigerDornbusch) in the 1970s, also known as the exchange rate decision of sticky-price monetary analysis (Sticky- PriceMonetaryApproach)The so-called overshooting usually refers to a variable that responds in the short run to a given disturbance beyond its long-term stable equilibrium bestforexrebate rebateinforextrading is thus followed by an opposite adjustmentThe precondition for exchange rate overshooting is that commodity prices are stickyThe so-called sticky price is a commodity price that sticks in the short run, but over time, the price level gradually changes until it reaches its new long-run equilibrium value Analytical conclusions: (1) Equilibrium exchange rates are determined jointly by the commodity and money markets (2) When the money market is out of balance, interest rates can adjust quickly, but because commodity market prices are sticky, they cause short-term interest rates to overshoot beyond the long-run equilibrium level, thus leading to exchange rate overshoot The distinctive feature of Dornbushs exchange rate overshoot model is the combination of Keynesian short-term analysis with At the same time, it has distinct policy implications: it shows that the long-term end result of the monetary expansion (or contraction) effect is to cause prices and exchange rates to rise (or fall) in the same proportion, but in the short run, monetary expansion (or contraction) does have real effects on interest rates, terms of trade, and aggregate demand when the government adopts expansionary or tightening When the government adopts expansionary or contractionary monetary policy to regulate the macroeconomy, it needs to be alert to the question of whether and how much the exchange rate will overshoot in order to avoid unnecessary fluctuations in the economy Dornbushs exchange rate overshoot model is the most basic model for macro analysis of open economies in international finance; it deals with the dynamic adjustment of the exchange rate for the first time, pioneering the analysis of exchange rate adjustment from a dynamic perspective, thus creating an important branch of exchange rate theory - exchange rate dynamics 2 Data interpretation Nowadays, financial theory pays much attention to the role of expectations, and investors often compare the actual value of economic data with the expected value, and if there is a big difference between the expected value and the actual value, it will cause investors emotions to fluctuate. Nowadays, the development of computer technology may lead to a large number of stop-loss orders being triggered, resulting in sharp fluctuations in the exchange rate and, according to Soros theory of reflexivity, awareness is a function of changes in awareness, behavior is a function of changes in behavior, and price changes themselves will lead to a deviation in value from the direction of equilibrium The non-farm payrolls report released on the first Friday of each month, because it is the first important economic The data, and the fact that the actual value often differs significantly from the expected value, can cause dramatic fluctuations in financial markets The U.S. nonfarm payrolls report The employment report includes employment-related information derived from two separate surveys, the business survey and the household survey Among them, the business survey provides information on employment in the nonfarm sector, average hourly work and total hourly index; the household survey provides information on the labor force, the Non-agricultural employment measures the number of persons earning in all non-agricultural industries, such as manufacturing and services. The monthly U.S. Non-Farm Payrolls report is often touted as the "crown jewel" of all economic indicators to which the foreign exchange market can respond, and it is the most sensitive monthly economic indicator in the market. Investors can usually see a lot of market-sensitive information from it The foreign exchange market pays special attention to the seasonally adjusted monthly U.S. employment release changes Strong non-farm payrolls indicate a healthy economic situation and may signal higher interest rates, and potentially higher interest rates prompt the foreign exchange market to push the dollar more, and vice versa So good or higher-than-expected U.S. non-farm payrolls data will A weak or weaker than expected data will lead to a decline in the dollar.

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