Learn How Interest Rates Move Currency Markets Up and Down
The global FX market is one of the most popular ways of trading today. Before the Forex market was the reserve of professionally traders and the super-rich who could afford the pros´ fees, but thanks to the Internet any individual can now participate.
But as we keep telling you, you need to study! The currency markets are no places for people who wear cone shaped hats with a big "D" on the front. You need to make sure there are "no flies on you" before you wade in- forex trading is not an easy game. Which brings us on to interest rates, which are one of the most powerful influences on currencies.
LIVE International Interest Rates CENTRAL BANKS.
An interest rate is defined as the amount of money, expressed a s a percentage that a creditor must pay a lender to borrow money. If you are smart on how interest rates go up and down, it´s going to help you pull together a strategy based on ecomonic fundamentals.
The rate you particularly need to be watching, is the country’s central bank rate. When the rate goes up, many traders and funds will look to move into the currency, simply because it pays off to hold the currency. Interest rates are also a good indicator of the status of a country’s economy. A country with a increasing interest rate is likely to be experiencing economic growth.
Many investors watch the rates constantly: so even if the rate rise isn´t a direct result of improving economic indicators, just be aware that markets are a bit like herds of wilderbeast. They may well stampede off in that direction anyway- your aim, should be to move off in that direction before the stampede starts. Start running early….
Generally speaking, when interest rates rise, the currency strengthens and when they dip, the currency will weaken.
So keep an eye on them!