For accurate AUD/USD forex forecast or any other currency forecast reading, there are various modes which you can use. For traders new to the field, the task of generating an accurate forecast is very daunting. But with the below-mentioned techniques, fx traders will be able to produce quality fx forecast without tiring out their brain.
Top techniques for calculatingAUD/USD forex forecast
PPP or Purchasing power parity:
The first method which all novel fx traders can use for getting good quality AUD/USD forex forecast or any other currency prediction is the PPP. It is indubitably one of the most trusted methods followed by Fx traders all over the world.
This technique is mainly based on the theoretical law of one price. This indicates that goods or commodities of identical nature will have the same price, irrespective of them being in different countries. This entails no one should get an arbitrage scope to purchase the good at a cheap price from one country and sell it in a different country for profit.
Depending on that PPP of forex forecast states the rate of exchange will differ as per changes in price caused by inflation.
Example- Say price in US is said to increase by 5% over the following year whereas for Canada it is only expected to increase by 2%. The difference in inflation is 3%. So as per PPP, because US has a faster inflation rate, it should deflate by 3% just to keep similarity in the price of both the nations.
Relative economy strength:
The second technique which many experts use for predicting AUD/USD forex forecast or any other currency reading is this one.
The main concept of this technique is that strong economic environment having a high growth capacity has more changes of enticing investors from abroad.
Hence in order to buy investments of their desired country, they would have to purchase that nation’s currency. This will cause an increase in demand causing a gradual increase in the currency demand.
The same can happen in case of an increase in the rate of interest. The increased interest rates will lure in foreign investors seeking out for high yield on investments. This will lead to increase in the currency demand.
If you compare these two popular strategies, Relative economic strength one just gives out the general behaviour of the nation’s currency and the complete feel of the strength of its movement.
The third technique of analysing AUD/USD forex forecast is examining the aspects which one believes will influence the currency movement. And making a model that links those aspects with its rate of exchange!
The techniques mainly follow economic theory for giving AUD/USD live forecast or forecast for any given currency.
Time series model;
Another mode which Fx exponents use for calculating AUD/USD forex forecast or predict other currency spreads. This mode is completely technical and involves no economic theories.
Here the previous price and data for calculating the future AUD/USD dollar forecast or any other currency forecast.
These cover up the techniques for calculating various currency forecasts.
Now that you know all this, get started with Forex trade and make use of this wonderful supplementary income earning option.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.