Hello Guest, if you are reading this it means you have not registered yet. Please take a second, Click here to register, and in a few simple steps you will be able to enjoy all the many features of our fine community. Note that lewd or meaningless nicknames are prohibited (no numbers or letters at random) and please introduce yourself in the section for you to meet our community.
pcm brokers pcm brokers
Results 1 to 6 of 6
  1. #1
    Junior Trader
    Join Date
    Dec 2013
    Posts
    16
    Post Thanks / Like
    Credits
    169

    Which factors influence the exchange rate?

    Today, We would be going back to the basics and understanding " How Forex works ?''

    As you may know any other market demand and supply determine the price of an asset, in this case the asset is the exchange rate between one currency and another currency.

    Exchange-rate Regime

    This is valid for a currency regime with free floating rates. The other two main exchange rate regimes are:

    - the so called pegged float and
    - the fixed rate regime

    Currencies such as the Chinese Yuan are not floating freely as they are allowed only to trade within a limited range around a certain price level (pegged float). It is almost impossible to make money trading a currency like the Yuan which can only be traded in a fixed corridor. Other currencies are fixed completely to the value of another currency and are not tradable independently.

    Four Main Fundamental Factors

    If you trade the highly liquid major currency pairs which are available to trade via the Forexchampionship you need to be aware of the fundamental factors which influence the exchange rate between two currencies.

    The four main factors are:

    -Inflation
    -Monetary policy
    -Economic growth
    -Interest rates

    These factors are linked and influence each other. Furthermore the creditworthiness of a country and its status as a reserve currency play an important role.

    These are the most important fundamental factors which can influence a currency but certainly this list is not “complete”.

    Other Factors

    As we have seen lately with the tensions between Russia and Ukraine – geopolitical events can influence currency prices. The immediate reaction of the market after the events in Ukraine over the weekend was to buy the US dollar and the Japanese yen.

    The USD is still the world’s reserve currency No.1 and the yen is the favorite funding currency in the carry trade. In times of crisis investors seek the “safe haven” of the US dollar and carry trades get unwinded as they are considered risky.

    Conclusion

    If you are aware of what’s driving a specific currency fundamentally and if you manage to combine this knowledge with technical analysis you have a good chance to succeed in currency trading.

  2. #2
    Junior Trader
    Join Date
    Apr 2014
    Location
    UK
    Posts
    14
    Post Thanks / Like
    Credits
    185
    My Language
    English
    One more factor is unexpected developments such as natural calamities, wars, political instability (for example in Ukraine) and great deal of other factors that have decent impact but almost impossible to predict.

  3. #3
    Junior Trader
    Join Date
    Sep 2014
    Posts
    16
    Post Thanks / Like
    Credits
    78
    In my view, I can tell you that the ratio of inflation, then the Monitory policies and after that interest rates by the central banks play role for big fluctuations, if we see the economical events of USD then Jobless claims, building permits, PMI and durable goods orders also play role in fluctuation of market, in the past, Ban Barnanke (the former Fed-chairman) speech also changed the market, now Janet Yellen speech also change the market a bit, but not more than Ben. on other side, if we see ECB, the president Mario Draghi speech also play role in the fluctuation.

  4. #4
    Admin of Indonesian Forum
    Join Date
    Oct 2014
    Location
    in front of my laptop and trading
    Posts
    254
    Post Thanks / Like
    Credits
    217
    My Language
    Indonesian
    A price of a pair traded will moved fast in the market because of some factors, and as long as I see, the main factor is the macro economic of a country. Here, I mean that the macro economic which is related with the pair we trade. We can see one of this statement comes from the inflation.

  5. #5
    Junior Trader
    Join Date
    Apr 2014
    Location
    UK
    Posts
    14
    Post Thanks / Like
    Credits
    185
    My Language
    English
    Quote Originally Posted by raheelrehman View Post
    In my view, I can tell you that the ratio of inflation, then the Monitory policies and after that interest rates by the central banks play role for big fluctuations, if we see the economical events of USD then Jobless claims, building permits, PMI and durable goods orders also play role in fluctuation of market, in the past, Ban Barnanke (the former Fed-chairman) speech also changed the market, now Janet Yellen speech also change the market a bit, but not more than Ben. on other side, if we see ECB, the president Mario Draghi speech also play role in the fluctuation.

    I snatched a good chunk of pips with Broker during Greece crysis it's not so hard to predict medium-term movement of the EUR this days. Many EUR/ pairs are highly correlated we can increase our return using combined schemes of hedging with them.
    Last edited by Moderator; 07-14-2015 at 09:28 AM.

  6. #6
    Junior Trader
    Join Date
    Oct 2018
    Posts
    2
    Post Thanks / Like
    Credits
    2
    My Language
    English
    Speeches also influences the Forex market. It is speeches by top financial institutions members or chair persons. If chairman of BoE makes a speech, we can expect some movement in the GBP. It will either by downward or upward, either way, if you are right about its impart you will make a profit.

  7. ARIONFORXtarder
 

 

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
Powered by vBulletin® Version 4.2.4
Copyright © 2018 vBulletin Solutions, Inc. All rights reserved.
Credits System provided by vBCredits II Deluxe v2.1.1 (Pro) - vBulletin Mods & Addons Copyright © 2018 DragonByte Technologies Ltd.
Feedback Buttons provided by Advanced Post Thanks / Like v3.3.0 Patch Level 2 (Lite) - vBulletin Mods & Addons Copyright © 2018 DragonByte Technologies Ltd. Runs best on HiVelocity Hosting.
All times are GMT +4. The time now is 04:59 AM.
CompleteVB skins shared by PreSofts.Com