What Triggers Rates

What Triggers Rates?

News about the market or important events taking place worldwide have always been the main reason behind traders who trade in the currency marketplace, expecting to benefit from this specific change in currencies. Any bought or sold product, just like any currency is subject to the laws of supply and demand. With the increase in the demand on a certain currency, its price increases in accordance to other currencies. When people do not use a certain currency or do not want to hold a country’s currency, its rate will go down. What are the influences that affect supply and demand for a currency?

Economic Growth

Investors aim to be investing in a sturdy economy that is achieving stable growth. Currency traders evaluating the economic growth of a country will keep an eye on unemployment, trade, and GDP data.

What Happens If...

BAD Rise in Unemployment GOOD Fall in Unemployment GOOD Rise in GDP BAD Fall in GDP GOOD Rise in Exports BAD Fall in Exports

Interest Rates

Money is likely to follow interest rates. Depending on the interest rates’ rise, investors will strive to take advantage of higher returns as money pours into the country from all over the world. To determine the direction of interest rates, investors pay attention to economic inflation indicators as well as speeches by leading figures. Usually, the timing of interest rate moves are known ahead after scheduled meetings by the BOE, FED, ECB, BOJ, and other central banks.

What Happens If...

GOOD Rise in Interest Rates BAD Fall in Interest Rates

Political Stability

Election turmoil, changes of government, high unemployment and international conflict all make investors cautious to put their money in a given country. Investors will watch for major news that comes out of a country.

What Happens If...

BAD Geo-Political Tensions BAD Natural Disaster BAD Threat of Terrorism