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I would like to know what are the main things that drive the fx market. What makes it go bearish/bullish and what happens when we recive positive/neg new release. Im new to all of this so any little info with be helpful.
Many thanks
I would like to know what are the main things that drive the fx market. What makes it go bearish/bullish and what happens when we recive positive/neg new release. Im new to all of this so any little info with be helpful.
Many thanks
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
interest rates
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.
I would like to know what are the main things that drive the fx market. What makes it go bearish/bullish and what happens when we recive positive/neg new release. Im new to all of this so any little info with be helpful.
Many thanks
:clap:what drives the markets ?...........fear and greed...the rest is detail
N
Re: What drives the fx market?
Traders.
What about central bankers and corporate hedgers?
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.