There are many games to try your luck but definitely forex trading is not a game of chance. We therefore always advise our clients to at least gain a basic understanding of the Forex market and what influences the prices of different currency pairs before they start trading. In general, fluctuations in exchange rates are caused by Fundamental and/or Technical factors. In this article we outline the basic fundamental considerations.
Political conditions
Actual monetary flows (flows for imports, exports, mergers, acquisitions) and expectations of changes in monetary flows.
Major news which is released publicly, often on scheduled dates and times which include:
(a) Economic policy formulated by central banks,
(b) Economic conditions generally revealed through economic reports (GDP growth, inflation, unemployment, relative interest rates, budget and trade deficits or surpluses, consumer confidence etc).
§ Market Psychology
Political Conditions
Internal, regional, and international political conditions and events can have a profound effect on currency markets. All exchange rates are susceptible to political instability (ahead of elections for example) and anticipations about the new ruling party. Political upheaval and instability can have a negative impact on a nation's economy. Also, events in one country or a region may spur positive or negative interest in a neighboring country and, in the process, affect its currency.
Political conditions
Actual monetary flows (flows for imports, exports, mergers, acquisitions) and expectations of changes in monetary flows.
Major news which is released publicly, often on scheduled dates and times which include:
(a) Economic policy formulated by central banks,
(b) Economic conditions generally revealed through economic reports (GDP growth, inflation, unemployment, relative interest rates, budget and trade deficits or surpluses, consumer confidence etc).
§ Market Psychology
Political Conditions
Internal, regional, and international political conditions and events can have a profound effect on currency markets. All exchange rates are susceptible to political instability (ahead of elections for example) and anticipations about the new ruling party. Political upheaval and instability can have a negative impact on a nation's economy. Also, events in one country or a region may spur positive or negative interest in a neighboring country and, in the process, affect its currency.
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