Learn to Know 4 Factors Affecting Forex Movement

Learn to Know 4 Factors Affecting Forex Movement

Forex Learning : The actions of buyers and sellers around the world who participate in forex movements generate trillions of dollars every day. In fact, forex / forex trading has become a global activity when economic events play a bigger role in the forex market.

Here we will learn about some economic trends and events for those who are new to forex.

The forex market is mainly driven by macro-economic factors that influence the decisions of traders to determine the value of a currency at a certain time (follow forex trading education). A country’s economic health is an important factor in the value of its currency due to the number of economic events and information that can change every day. In turn, this will affect price movements.

Let’s take a closer look, 4 factors that influence changes in currency value movements.

Capital market

Capital markets are the most visible indicator of a country’s economic health. Strengthening or falling on one country’s stock market usually signals the economy in the eyes of investors.

Forex traders rely heavily on economic data so that in many cases the same economic data will have a direct effect on market movements.

International trade

The level of trade between countries represents the demand for goods or services from a country. The higher the demand will usually have an impact on strengthening the country’s currency. Example: to buy goods from Australia, an importer from outside Australia must convert their currency to Australian dollars (AUD). This will also increase the demand for the AUD, so that it will have a strengthening effect on the AUD.

The trade balance surplus and deficit is an example of a country’s economic data in terms of international trade. If the surplus increases – or the deficit decreases – then the country’s currency will usually strengthen. Conversely, if the surplus decreases – or the deficit increases – then the country’s currency will usually weaken.

Political conditions

The political situation of a country also plays a major role in the country’s economic prospects and will have an impact on its currency. Forex traders will continue to monitor political news and events to measure the economy related to currencies.

Elections are major events for currencies. The exchange rate strengthens if the party who has the program and the good influence for the economy comes out as the winner of the election. In short, if the winner of the election is the party that is “coveted” by the market, then the country’s currency will strengthen.

Fiscal and monetary policies from the government are the most important factors in economic decision making. The central bank’s decision on sharp impact on interest rates also affected the forex market.

Economic Report

Economic calendar reports are very important when prices move quickly on the market. A report on GDP (Gross Domestic Product) or GDP (Gross Domestic Product) may be the most obvious economic data, because it is the basis of a country’s economic strength.

Inflation is also a very important indicator because it is an indication of increasing prices and purchasing power. However, inflation is a double-edged sword where there is often pressure on currencies when purchasing power decreases. On the other hand, it can also cause currency appreciation because it can force the central bank to increase interest rates in order to control inflation.

Other reports such as the employment sector also carry important information about a country’s economic strength. One of the jobs sector data that is the popular in forex trading is US Non-farm Payrolls data.

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