Introduction
The forex market is normally made up of different currencies. The currencies are from all over the world. The currencies being from all over the world can make market predictions to be very difficult. This is because many factors can contribute to price movements. Just like any other financial market, the forex market is also driven by demand and supply. To be a pro in forex trade, you will have to learn and understand the factors that cause the fluctuations. Here are some of the factors that influence the forex market prices
The central bank
Supply is normally controlled by the central bank. Every country has a central bank. The central banks are always responsible for announcing the measures that can have a significant effect on their currency’s price. Quantitative easing is a good example because it involves injecting money into the economy. This can also make the current price drop.
News reports
The news report is also another thing that can affect or move the forex market price. Banks and investors tend to put capital into the economies that tend to have a strong outlook. If there is news of a region that is positive, investors get interested in that region because positive news will always encourage investment. Similarly, any price of negative news will make the price of a currency to be lower and that will reflect on the health of the economy. To understand news reports, look for the top 8 forex brokers in south africa
The market statement
Market sentiment is also another very important thing that can affect the forex market. Market sentiments are always in reaction to news received. Whatever is being said as news can have a major impact on the forex trade prices. If investors believe that a currency is headed in a certain direction, they will be interested in trading and they will also do all they can to convince others to also trade. Because of the news received, the demand can either increase or decrease.
Economic data
This is another important thing that can drive the forex trade market. Economic data is always integral to the price for currencies because of two major reasons. The first reason is that it gives an indicator of the current state of the economy and it might also give traders an insight into what central banks are planning to do next. This plays a very important role in forex trade. This can all be possible through the help of the best forex brokers in south africa
Credit ratings
Traders are always doing their best to maximize the returns that they can get from the market. They do all that by trying to minimize possible risks. Apart from just looking at the interest rates, you should also consider focus on credit rating as you are doing business or as you are trading. A country’s rating is just a simple assessment of its possibilities of repaying its debts. A country with a high credit rating is always seen as a safe place to invest compared to countries with lower credit ratings. A country with a great credit rating can see its currency upgraded.
