There are indicators in every economy of how conditions in that country will affect their money. Domestic employment, imports and exports and changes in the interest rates all effect currency trading.
Interest rates are unique in their relationship with currency. As interest rates increase, foreign investment increases and the basic rules of economics apply to raise the value of the currency. Interest rates adjustments are somewhat predictable in their timing. They follow announcements or regular meetings of the world’s major banking institutions or political economic announcements. Currency trading in turn is related to currency values.
Stability, both politically and economically, is the highly preferred state for investment countries. Terrorism, natural disasters, unemployment, civil unrest tend not to attract foreign currency trading and subsequent value increases in the currency.
We live in such an international world now that events around the world can affect seemingly unrelated currencies, both good and bad. There are indicators, patterns, history and trading experience, which are all used to predict the future. These indicators are used for Forex trading.
The matter of scale must also be figured into the discussion of influences on currency trading. Hourly or daily fluctuations are on one scale. Monthly or yearly patterns may be on a different scale for many Forex trading pairs.
There are many pairings and there are two sides to every trade. This may sound quaint, but it is a reality of the factors that affect the value of currencies. There are natural disasters, overt and covert political moves and daily domestic situations all at play in determining currency rates and foreign trading.
Foreign currency trading is a river of money, controlled by domestic politics, economics, and world events.
Stephanie Mundle is the managing editor of http://www.MoneyMasteryForum.com an informational forum site for the average investor. Take a look. Information on forex, debt, money management, investing and business.
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