What makes forex go up and down

[JamesWright]

I agree with whoever just plainly said 'macroeconomics'.

Commodity prices (I.e. Oil & Canada/Gold & Aussie), 'general economic health' (I.e. when the Euro collapsed the Swiss was a safe haven), Inflation, Economics of War, Base-rates etc. etc.

If you want to know where a currency will be 1 year down the line, generally, it's the macroeconomy (which in turned is fuelled by the microeconomics). It's the macroeconomics which causes the demand for a currency. [The supply is somewhat influenced by the macro in my opinion]

 

[Eurex]

Hey guys. I'd like to know what moves currencies up and down. What are the factors that move it I know interest rates is 1 but what are the others? I want to kinda know where the trend is heading economically!

Alright!

Some of the factors influencing the markets

EUR/USD - FED is buying $85B worth of securities pm which is pumping lot of dollars in the market. This should weaken USD but EuroZone is going through the crisis so investors have to come to a fair value and with Interest rate cut from DragiECB the currency pair should fell below its previous level.

Also there is talk of -ve interest rates which if applied will take the money out from Europe or in short people will sell Euro and it will go down.

Here is order of priority for EURUSD

FED Conf., ECBConf

NFP on first Friday at 1330GMT is the biggest mover of currencies as of now.

After that ISM from US.

Executive members from ECB or Fed

My advise for reading

1. Fed (US Central Bank) and ECB(Central Bank) site and look for there mandate.

2. Read Economic indicators book and understand the NFP and its components and other indicators.

3. Subscribe to some Squawk like RanSqwak as they provide the data in text format on there site and ;look for its effects on charts.

3. Read Currency Wars - Go to FT.com and read about currency wars. What is happening is all the central banks are playing games to win on recession. FED is pumping billions of USD in the market. BOJ has started its unending Bond buying so Yen is weakening which is what they want which is making export oriented countries like Germany, China etc unhappy.

Above are random thoughts then there are currencies correlations. like AUS-China, Petrol-CAD, Gold-CHF, Petrol-Japan... reading FT or economists will give you perspective or awareness about the whole market and where its most likely to be headed.

 

[Splitlink]

I am the sole reason the market moves despite what you hear. When I buy the market immediately falls, when I sell the market immediately rises. Rinse & repeat.

Peter

Are you certain about that?

If so, send me a pm a few minutes beforehand. Who knows, perhaps we could corner the marke!

 

[PulseRes]

The best type of fundamental macro analysis to study for determining the direction of the markets is to study them in the same way that a central banker would. To get a real grip on the situation one should not just look at macroeconomics as a stand alone field and instead do some reading on behavioural finance, mass psychology etc.

The best info that can ever be obtained is from studying the interaction between the fundamentals and the markets. For example, take the situation that Bernanke created by mentioning the withdrawal of QE. That was just the initial step, now stocks gained further since then thereby making the probability of the scenario higher. If stocks however would have weakened significantly then the probability of the stated scenario would have been much lower.

 

[Crunchy1]

I think that news does all the stuff!

 

[Hate2Lose]

Hey guys. I'd like to know what moves currencies up and down. What are the factors that move it I know interest rates is 1 but what are the others? I want to kinda know where the trend is heading economically!

Hi,
There are lots and lots of factors that influence currency moves, as you mention Interest Rates are a big influence and a few others are;

US Non-Farm payrolls
PMI data
CPI data
Retail Sales
Durable goods

As I say there are lots of influences but if you start with the above you will be heading along the right lines