Disclaimer: Forex trading involves high risks, with the potential for substantial losses and is not suitable for all persons. The views expressed in this blogsite are those of the author(s) and do not necessarily reflect the official policy, position, or opinions of Global Forex Trading. Excerpt from: Forex Training
|  | | August 08, 2008 | | FX market and interest rates | The last few days, there has been a lot of focus on interest rates. This is because interest rates can affect what goes on in currency trading on the FX market. Interest rate decisions are always watched carefully.
Why forex traders watch interest rates
Forex traders watch interest rates because they are indicators of how the economy is doing. When an economy is strong, its currency is usually strong as well. Likewise, a weak economy usually leads to a weak currency.
Interest rates indicate the direction an economy is going. A hike in interest rates usually means that an economy is gaining in strength. It is expanding, and the higher interest rates keep inflation in check. Higher interest rate usually boost the currecny on the FX market.
Lower interest rates, on the other hand, imply that the economy needs stimulation to help it growing. This damages the currency in FX trading.
| Topic Tags: currency FX market, currency trading, currency trading FX market, economy, forex traders, FX market interest rates, FX trading, interest rates | |
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