Learn to Know the 4 Aspects That Influence Forex Movement
The actions of consumers 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 as economic moments play an increasingly large role in the forex market.
Here we will also learn about some economic trends and moments for those new to forex.
The forex market is mainly driven by macroeconomic aspects that affect the provisions of some traders to determine the value of a currency at a certain time (following forex trading education).
The economic health of a country is an important aspect of the value of its currency because many economic moments and information can change every day. In turn, it will also affect price movements.
Let's take a closer look, 4 aspects that affect changes in currency value movements.
1.Capital market
The capital market is the most visible sign of the health of a country's economy. A strengthening or declining stock market of a country is generally an economic sign in the eyes of investors.
Forex traders rely so heavily on economic data that in many cases the same economic data will also have a direct impact on market movements.
2.International trade
The level of trade in a country represents the demand for goods or services from a country. The higher the general desire will also be a risk for the strengthening of the country's currency. Example: to buy goods from Australia, importers originating from outside Australia must convert their currency into Australian dollars (AUD). This will also increase the desire for the AUD, thus having an impact on the strengthening of the AUD.
The trade balance surplus and deficit are examples 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 generally strengthen as well. And vice versa, if the surplus shrinks – or the deficit increases – then in general the country's currency will also weaken.
3.Political situation
The political conditions of a country also play a major role in the country's economic prospects and will also harm its currency. Forex traders constantly monitor news and political moments to gauge the economy in terms of currencies.
The election is a big moment for the currency. The value of compensation strengthens if the party that has a good program and has an economic impact comes out as the winner of the election. In short, if the winner of the election is the party "targeted" by the market, the country's currency will also strengthen.
The government's fiscal and monetary policies are the most important aspects in making economic decisions. The central bank's provisions on high-risk interest rates also affect the forex market.
4.Economic Report
Economic calendar reports are very important when prices are moving fast in the market. The GDP (Gross Domestic Product) or GDP (Gross Domestic Product) report is probably the clearest economic data, because it is the basis of a country's economic capacity.
Inflation is also a very important sign because it is a sign of rising prices and purchasing power. However, inflation is a double-edged sword because there is often pressure on a currency when purchasing power declines. On the other hand, it can also lead to currency interest because it can force the central bank to raise interest rates in plans to regulate inflation.
Other reports such as employment also carry important information about a country's economic capacity.