Inside the currency market: Imports, exports and inflation
Imports vs exports. X = Imports. Y = Exports. Correlation + 75%. R 2 = +57%.
P Values 0.003151. Significant at less than 0.05, Less than 0.01, Less than 0.10
Z Score = -2.73
Imports vs inflation. Y = Inflation. X = Imports. Correlation = – 30%. R2 = 0.0957
P Value = 0.304289. Not significant at 0.01, 0.05,0.10
Z Score = -0.51
Exports vs inflation. X = Exports. Y = Inflation. Correlation = -0.2349 or – 23%. R2 = 0.0552 or 5%. Although technically a negative correlation, the relationship between your variables is only weak (nb. the nearer the value is to zero, the weaker the relationship).
P Value = 0.441617. Not significant at 0.01, 0.05 and 0.10.
Z Score = -0.14.
Export line above Imports = Inflation down 5 times. Imports = Exports, Inflation no change. Import Line above Exports = 2 times and Inflation down.
DXY Vs Inflation. X = DXY. Y = Inflation. Correlation -0.278 or -27%. R2 = 0.07.
P Value = 0.3577. Not significant at 0.01, 0.05, 0.10.
Z Score = -0.36.
Higher inflation = Lower DXY
Exports above Import lines appears to lower Inflation in 12 and 13 monthly observations. A significant difference exists to Import and Export lines by -2.73 Z Score.
Inflation average move 0.44 or 0.04. Import Vs Export averages = 0.90 Vs 0.71 and 0.93 Vs 0.81. Inflation larger moves appears from reports as a wider difference due to Exports and Imports. Inflation and Exports and Imports report for the previous month so data is fairly aligned yet only a yearly view.
Does higher Inflation drive down Imports and Exports. Appears to drive lower to DXY.
Author
Brian Twomey
Brian's Investment
Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.
