Forex with sellers and buyers from all parts of the globe participating in a huge amount of dollars of trades each day is a real global marketplace.
In Forex, macroeconomic events play an even greater role than ever before which is indicated by the fact that foreign exchange trading has become a globalized activity. Here some that those new to Forex should be aware of economic events and trends.
Capital Markets
While stock and bond markets are the most noticeable markets in the world the global capital markets are perhaps the most remarkable indicators of an economy's health. There is not much public information that the capital markets miss with up-to-the-second information on the dealings of institutions, corporations, and government entities and constant media coverage.
For that economy, the future outlook has changed in investors' eyes which are signalled by a wide rally or sell-off of securities originating from one country or another.
Similarly, numerous economies are driven by sector. In this case, to the movements of commodities dollar is heavily correlated. Relative to other currencies a rally in oil prices would likely lead to the appreciation of the loonies.
Like Forex traders in Forex trading, Commodity traders for their trades depend more on economic data. So a direct effect on both markets will be there on the same economic data will in many cases.
Moreover, since both currencies and fixed income securities rely heavily on interest rates, in the Forex market the bond markets are critical to what is happening. A change in yields will directly affect currency values are indicated by the fact that in movements in currencies movements in treasuries is a first level factor.
To excel as a Forex trader it is important to understand how bonds especially the government bonds are valued in order. This is because the two markets are closely tied.
Political Conditions
In the economic, outlook for that country a major role is played by the perceived value of its currency and the political landscape of a nation plays. The economy may be taken in by the country’s government to gauge what moves are constantly monitored by Forex traders for political events and news.
Measures from tightening restrictions on a particular sector or industry to increasing government spending can be included in this. As to parties with fiscally responsible governments and platforms willing to pursue economic growth exchange rates will often react more favourably, a major event for currency markets is an upcoming election always.
The most important factors in its economic decision making are the monetary and fiscal policies of any government in Currency trading. For any changes in key rates or future outlooks the Forex market keenly watches the Central bank decisions that impact interest rates. Being indicators of a country's economic strength the economic factors drive the Forex market. The most important determinant of its currency's value is the economic outlook for a country. So you can keep pace in the fast-moving and competitive world of Forex by knowing the indicators and factors to watch.
