Are you suggesting a search engine drives the market? What a novel idea. I suppose you need an engine in something for it to be driven?
bbmac
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Supply of, and demand for the respective currencies drive the fx market - it is that simple...as a tech trader ( ie a trader whose trading edge is derived from technical analysis) - that is all you need to know as this supply and demand is reflected in price action and patterns of price action that repeat giving rise to the possibility of developing an edge in the market from such...Of course other kinds of trading edges require you to know what is driving such demand/supply (a fundamental analysis derived edge for eg.)
As for individual data/news releases - these contribute to and are a measure of the overal fundamental/global macro environment/factors driving such supply/demand for a currency (s) and they can move markets dramatically over a short period of time. This occurs particularly if it is an eagerly anticipated data/news release and if it is deviated from the previous number/the expected number (the forecast [range.]) Revisions to previous numbers can also affect how the market reacts to them.
I suggest a lot more 'basic' reading may be required ?
G/L
As for individual data/news releases - these contribute to and are a measure of the overal fundamental/global macro environment/factors driving such supply/demand for a currency (s) and they can move markets dramatically over a short period of time. This occurs particularly if it is an eagerly anticipated data/news release and if it is deviated from the previous number/the expected number (the forecast [range.]) Revisions to previous numbers can also affect how the market reacts to them.
I suggest a lot more 'basic' reading may be required ?
G/L
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scose-no-doubt
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interest rates
Atilla
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These are the contributing factors inputs etc.
1. Balance of Payments, exports imports etc
2. Inflation
3. Interest rates
Always beware of real and nominal values. That is consider real interest rates. If i=5% and r=1% then real interest rates are -4 so unless BoP is +ve currency will depreciate.
Also some currencies are commodity influenced. ie The Russian ruble can be moved by price of oil and/or gold as they export these. Similarly if the coffee bean is a dominant export for the Columbian / Brazilian market then any drought or change in demand / supply can have significant indirect influence on currency as traders pencil in the BoP change etc.
Thank you very much.
NVP
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thank you
NVP
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LuKOs.ro
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The global FX market is influenced by 2 main categories of factors:
1. Central banks (FED, SNB, BOJ, ECB, BOE) and major FX banks (Deutsche Bank, JP Morgan, Goldman Sachs. Central Banks drive part of the currency flows by controlling interest rates (BOE), by effectively intervening on the market to depreciate their currency (FED, BOJ), by setting a peg on their currency (SNB), and by various market operations such as repos, revers repos, interest rate swaps and others. Major FX banks are usually market makers and are either making money out of spreads, or effectively taking their own position and betting against some of their customers. Major FX banks can generate small movements if they know a great number of stop losses or take profits are in a certain area.
2. Economic Factors such as Balance of trade, Balance of Payments, Current account, inflation rate, real interest rate differential between two countries, economic outlook. These may provide the medium to long term trade, but usually don't influence short term movements. Only if an "unexpected" news is published, could they generate a movement.
Depending on your trading style, whether long term investor (where I would look at economic indicators) or day trader (where I would learn technical analysis and watch out for unexpected news) you may choose which of the factors to follow. Sometimes it may get tricky, as fundamentals may be counter-signalling the technicals.
Hope this helps,
Lucian
1. Central banks (FED, SNB, BOJ, ECB, BOE) and major FX banks (Deutsche Bank, JP Morgan, Goldman Sachs. Central Banks drive part of the currency flows by controlling interest rates (BOE), by effectively intervening on the market to depreciate their currency (FED, BOJ), by setting a peg on their currency (SNB), and by various market operations such as repos, revers repos, interest rate swaps and others. Major FX banks are usually market makers and are either making money out of spreads, or effectively taking their own position and betting against some of their customers. Major FX banks can generate small movements if they know a great number of stop losses or take profits are in a certain area.
2. Economic Factors such as Balance of trade, Balance of Payments, Current account, inflation rate, real interest rate differential between two countries, economic outlook. These may provide the medium to long term trade, but usually don't influence short term movements. Only if an "unexpected" news is published, could they generate a movement.
Depending on your trading style, whether long term investor (where I would look at economic indicators) or day trader (where I would learn technical analysis and watch out for unexpected news) you may choose which of the factors to follow. Sometimes it may get tricky, as fundamentals may be counter-signalling the technicals.
Hope this helps,
Lucian
natureboy
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:clap:
There it is. EMOTION is a part. ECONOMIC Supply/Demand Fundamentals is also a part.
Both Emotion and Reason account for price behavior. Sometimes news that is bullish for a currency gets a muted reaction (minimal reaction) in price... Sometimes even opposite reaction to a logical expectation, though this is less common in currencies than say earnings announcements with stocks from what i've seen (which is only a couple years). Economic numbers are usually tradable intraday, though sometimes risky when spike indecision happens...
I've heard Business positioning accounts for 60% of price action, Emotional decisions account for 40% -> I have no idea how this could actually be statistically verified..
natureboy
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What about central bankers and corporate hedgers?
They have traders too.
FXGroundworks
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The main thing that makes the market go up and down are peoples emotions. People will “feel” like buying or selling a currency pair and when that happened supply and demand kicks in. Of course news does make the market go a little wacky sometimes but remember it’s the peoples emotions to the news which causes their reaction to buy or sell. News is one of these, world disasters are another (like earthquakes etc). The state of a countries economy (like news on Greece at the time of this writing). All of these are which triggers peoples emotions and thus causes the market to move.
Atilla
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So the whole world must be pretty pissed off at the moment.
Anybody happy out there?
