INTRODUCING, THE KEY PLAYERS IN FOREX
As thousands of traders and huge sums of money are involved in forex everyday, even the smallest alteration may cause havoc in the market, hence it would be advantageous to have an idea of what may cause it to shift. Primarily, macroeconomics is a major driving force in forex, and also determines the economic health of a country. Here is a quick glance at some of these factors.
Capital and bond markets
Capital market is probably the most apparent indicator of an economy’s current state. For example, a rally in terms of buying and selling assets at a particular nation may equate to a change in investor's’ view of a state’s economy. Bond market, meanwhile, is the most observable gauge in determining the current condition of forex market. It deals mainly with debt and government issued securities, making it one of the vital aspects to watch for in forex since it mainly relies on interest rates. Fortunately, traders and investors are always updated with the present position of these markets via news outlets.
Also a consideration is the balance of exchange between countries as its levels serve as a substitute for the state of demand and supply in a certain place. Meanwhile, deficits and surpluses may point out a nation’s current standing in international trade. Let’s say a country has high deficit; chances are they will be importers of goods and services, resulting to their currency being sold.
One reason behind traders following political news as keenly as they follow financial ones is that a change in political regulations may largely impact the market as well. This includes slashing of rates, spending, fiscal policies, and restrictions. A perfect example for this is the controversial Brexit and nearing elections in US.
Issuance of economic figures is an efficient basis for market shifts. A calendar would also be helpful, as it aids you in keeping track of the pace in a marketplace. Perhaps among the most reliable economic reports would be the GDP and inflation. GDP measures the productivity in terms of goods and services within an economy although it is dubbed as a lagging indicator because it provides data on trends that already occurred. Moreover, inflation is the signals price levels and falling purchasing power. It may either result to an appreciation of currency or a downward pressure towards it.
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POPULAR FOREX DEFINITION
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