Information is the primary diver affecting currency trading rates. So many different thing come in to play when you consider that the forex market tries to weigh up the value of one currency versus another. You are immediately looking at things that effect two major international countries’ economies. Given that the forex market assesses more than a dozen different international currencies and the cross flow of potentially influential information is massive.
The first thing to consider is the fundamental macro-economic news and information about a particular currency:-
Monetary Policy
Interest Rate Levels
Economic Data
International Trade flows
International Investment flows
Another important fundamental is political events that may affect confidence in a currency such as forthcoming election or even statements from politicians or major players in the financial scene like the Fed in the US or Bank of England in the UK.
At the micro-level, analysis of the currency markets by traders or forex brokers themselves on a day to day basis has an impact. This usually takes the form of technical analysis, the use or price charts and trends.
Forex market sentiment also plays a huge part in the direction a currency is heading both in the short, medium and longer terms.
In short the forex markets can and are influenced by a huge array of factors and the successful online forex trader must keep abreast of events at both the macro and micro levels.
