A fluctuation in the exchange rate is usually caused by actual monetary flows. Also, the expectations of changes in monetary flows caused by changes in GDP growth, inflation, interest rates, budget and trade deficits or surpluses, large cross-border Mergers & Acquisition deals and other macroeconomic conditions. In the forex market there is generally little or no 'inside information'. Major news is released to the public, often on scheduled dates. Many people have access to the same news at the same time. The large banks have a very important advantage; they can see their customers' order flow.
Many factors affect exchange rates. Currency prices are a result of supply and demand. The world's currency markets are a huge melting pot. Due to the large and ever-changing mix of current events, supply and demand factors are constantly changing, and the price of one currency in relation to another shifts accordingly. No other market takes in and refines as much of what is going on in the world at any given time as the forex market.
No comments:
Post a Comment