Chapter 5
Looking at the Big Picture
In This Chapter
Getting to know the main drivers of currency rates
Monitoring monetary policy and interest rates
Understanding official currency policies and intervention
Gauging risk sentiment and financial stability
The forex market is inherently a big-picture market. FX traders focus on
- Interest rates and monetary policy developments.
- Economic growth and inflation data.
- Political elections and economic policies in major economies.
- Geopolitical risks, trade conflicts, and terror attacks.
- Major movements in other financial markets.
On a daily basis, currency traders have to sort through myriad economic reports, interpret the comments of political and financial officials from around the world, take stock of geopolitical developments, and assess movements in other financial markets. They do all this to help them determine what direction major currencies are likely to move.
Unfortunately, there is no set recipe for absorbing the daily flow of data and news to produce a clear-cut answer. Even if there were, many different market actors are pursuing ...
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