11 Basic Things to Know the Character of a Currency
Currencies like humans, have their own characteristics and characteristics. There is an easy change in attitude (value) just because of a small problem, there are very active and some are quiet. Some of these things make the currency or foreign exchange market a special attraction.
When we are trading in the forex market, of course we will relate or interact with one currency. Therefore, we should know the character of the currency first. If we already understand the character of the currency, it is likely that it will be much easier to understand the movement of its value.
To understand the character of a currency value, of course we also have to understand the conditions of that country. Of course it is not easy to understand the economic conditions in a country. But it can provide more information to get to know the character of the currency in question.
Looking at Currency Characteristics from Various Factors
For example, we will try to recognize characters from United States Dollars or abbreviated as USD. To get to know more about this USD, we can find out the conditions or economic turnover activities in the United States. Here are 11 important things you need to know, such as:
- Is the pace of the economy in the United States experiencing a trade surplus or trade deficit?
- Exported from the USA?
- To which countries are US products exported?
- Imported into the United States?
- From which countries do you import products to the United States?
- Is the US Bond market currently attractive or not?
- Is the US Stock Market attractive or not?
- Find out about the central bank, what are the tasks, how much foreign exchange reserves in the form of currency or gold?
- Does the US Government often directly or indirectly intervene in financial markets?
- What economic news has a major influence on the value of the United States Dollar?
- Is the US Dollar a currency that is classified as “Safe-Haven”?
To understand the character of the USD, you must at least know the answers above. Then what is special about these questions? Why do we have to spend time and bother looking for the information above?
Before you want to marry someone, you will certainly find information about your prospective partner, right? This also applies when we will invest in a product that we will invest. If you don’t know more deeply, then you will be wrong in choosing your partner.
Main Currency in the Forex Market
American Dollar (USD)
In addition, the US dollar is also one of the currencies that correlates with commodity prices such as gold and oil. Because the USD is the main currency in the international market, all situations and conditions concerning the United States are very important to observe.
The Euro is the currency used by all member countries that are members of the European Union. The euro is also considered a major currency after the US dollar on global financial markets. Each transaction uses a euro that accounts for 37% of total currency transactions worldwide.
GBP is the official currency of the United Kingdom. Even though the UK was previously a member of the European Union (then came out after the Brexit referendum). The UK does not use the euro currency and still retains the use of pounds. GBP is one of the major currencies with a total of around 15% of all global currency exchange transactions.
Japanese Yen (JPY)
Japanese Yen This currency is considered as one of the unique currencies because each movement in its value is influenced by various factors. Japan, which is known as a country with very advanced technology, only has limited resources. Noted, Japan often trades with trading partner countries to buy various additional resource commodities. For this reason, the exchange rate of the Japanese Yen is strongly influenced by prices of imported commodities in the country.
Australian Dollar (AUD)
Australia is one of the largest mining producing countries. The mining sector is the main sector supporting the Australian economy after the trade sector. That is why the Australian dollar is very sensitive to commodity prices, especially the price of gold. In addition, Australia has close relations with China, especially trade. So China’s economic conditions also greatly influence the exchange rate of the Australian dollar (AUD).
Canadian Dollar (CAD)
Canada is the largest gold producing country in the world. That is why the Canadian dollar exchange rate can also be affected by the price of gold. Besides this the Canadian dollar is also a little sensitive to oil price movements.
Swiss Franc (CHF)
Switzerland is a country that has the safest ‘asset stores’ in the entire world. This is due to the lack of banking terms and regulations. In the forex market, the CHF exchange rate does not have high enough volatility every day. The reason is the Swiss National Bank (SNB) is very diligent in the intervention of the CHF exchange rate to remain stable. But once there is a change in SNB policy, especially changes in interest rates, the volatility of CHF currency movements will be very high.