If there is one market that is vastly affected by what is going on in the world, it is the foreign exchange.
Consisting of different currencies around the world, the foreign exchange market can be just easily shaken by the current global events. Because these events are volatile in nature, prices and exchange rates are constantly changing.
Economic and political events have been the two major forces that send huge waves to the Forex market.
The economy of a specific country has an impact to its own currency. Investors deeply consider economic figures and reports such as inflation, money supply, employment rate and trade figures as their basis of their decision in trading. It simply goes, the healthier the economy, the higher the value of its money. On the other hand, a nation’s large deficit could mean lower value of its trade and currency.
Traders put big importance to the performance of a nation’s wealth. It sets trend and pattern in the Forex market that can affect their investments.
Politics has been linked to the global market. A government viewed as an economically friendly sends positive signals to traders while instability and turmoil in a country’s government produces negative impact to the market.
Just as recently, the US elections created big uncertainties across the globe’s major stock indices. Traders became more cautious as Donald Trump surpassed Hillary Clinton on some presidential polls. Furthermore, investors pulled out and sold off their investments when a projected Trump victory was seen. The stock market crashed as the Dow futures lost 800 points while Japan’s Nikkei shed 1000 points and Asian markets were also seen tumbling. On a positive note, European equities benefited from the recently concluded race with its benchmarks gaining some grounds overnight.