What affects the currency market?

[tomhunter]

Hello

Just a quick question about how the foreign exchange market works:

Are currency buying transactions not related to investment such as people buying to go on holiday in the same supply/demand market as forex traders operate in?

Do they have much of an impact on it?


Thanks

 

[Jack o'Clubs]

Tom,

With respect, I've noticed you' ve been asking some really really basic questions, including this one. I suggest you spend a bit of time reading stuff on the knowledge lab section of this site, and/or buy a good book on forex: try this one:

http://www.amazon.co.uk/Day-Trading...f=pd_ka_6/202-2905699-8225467?ie=UTF8&s=books

Most of the guys on here are very willing to answer genuine questions but no one has time to spoonfeed an absolute beginner who hasn't bothered to do his homework. Sorry - meant with goodwill and in your own best interests.

 

[Priceman]

Tom, JoC is right when he says you need to do your own homework. We were all there once and I have spent hours researching for myself. I'll send you a PM of what I have used, like books, links etc.

Lot of work ahead my friend! Best of luck

 

[Cable49]

What causes changes to the currency rates

Tom

The main movers of the currency market are speculators or traders, hedge fund managers, akin to George Soros (almost broke the Bank of England in 92), multinational companies, such as Coca Cola and Central Banks.

Multinational companies need to be buying and selling in different currencies. They therefore need to protect their money against adverse changes to the currency rates. They do this by buying and selling options

Central Banks, like the Bank of Japan can manipulate the strength of their currency by either buying or selling large amounts of Yen. As you said its all about supply and demand.

US economic indicators have a big effect on the forex market, such as the Non Farm Payroll

Hope this is useful

Cable 49

 

[de123]

im still a learner,...but can spare u with some advices, but u need to do some google research

1. ELECTIONS
it works like this:
before elections,...the currency usually gains its strenght
after establish government it usually weakenes

2. GROWTH vs CURENCIES
growth go up, currency down
currency up, growth down

This can be explained in a more soft version,...
like Sell on may and go away in stock market,
that means that dolar might gains the strenght on May

CRISIS
Example Hungary, Poland crisis,...their currency weakened during those crisis
Example UK terorist attack,...ur currency weakened when it hit your subways

INTEREST RATES
Central bank, do increase the rates if they wont the currency to not have such inflation risk, or when they expect it will weakened and thats not good for their economy, even if the growth is being hurt

MANY OTHER NEWS do influence on currency like
Non farm reports
Holidays (it can gap up during us holidays)
home sales
jobs
CCI, CPI, consumer index,...
oil, gold, bush speech etc...

AND ofcourse The Technicals
Daily chart rules