Geopolitical Factors Can Affect Forex Value?
Geopolitical Factors Can Affect Forex Value? – Are you a forex trader? To what extent have you pursued this business? Have you already felt the benefits of doing forex business? Or are you still in the adjustment stage so there is still a lot to be improved?
For a newbie in the forex world, doing the trading process is certainly not an easy thing. Forex is also not a business whose profits can be directly enjoyed in the short term. Newcomers are generally often influenced by fear of things that affect the price of a currency pair on the market.
Many factors underlie changes in the price of this forex currency pair. These newcomers will guess what factors cause changes in the forex price. Simply put, the prevailing exchange rate will be likened to the rate of change in the supply and demand factors. Generally when the buyer is more than the seller, the price will rise, and vice versa if the seller is more than the buyer then the price of the currency will go down.
Another thing, there are several fundamental factors that are equally important that cause price changes. One of them is a geopolitical event. Geopolitics is characterized by war, terrorist attacks and similar incidents. This has a considerable influence in the decline in foreign currency prices. If this is a safe and economically stable country, it will become a favorite destination for traders.
This has happened in recent times where the value of the Dollar has fallen lower than other major currencies. This is based on concerns about increasing military tensions between the US and North Korea. In addition, there is an issue of uncertainty about US interest rates in the future. This news also makes the Greenback under pressure.
Furthermore, the value of the US dollar slipped after US factory orders declined in July and sparked concerns in the manufacturing sector. Market sentiment weakened following a North Korean diplomat who said that his country was ready to carry out another attack on the United States.
Because of this, Yen Save Heaven and Swiss Franc are higher. USD / JPY dropped to touch 0.08% at 108.73 and USD / CHF slipped to 0.16 at 0.9540. EUR / USD rose to 1.1944. GBP / USD is stable at 1.3038. AUD / USD fell 0.15% at 0.7984.NZD / USD fell to 0.08% at 0.7226.
It is a bit difficult to predict price changes that occur now and in the future so that you can make a buy or sell order before it happens and make a profit from it.Understanding of political and economic factors is very necessary and continues to be developed along with your increasing experience in trading.
In addition to geopolitical factors, there are still some other fundamental factors that are believed to be the source of declining foreign currency prices on the market, namely:
Differences in economic growth rates – Countries with high economic growth will experience an increase in value in their currencies, while economically less stable countries will make investors move from currencies of other economically more stable countries.
Commodity prices – As is known if the main currency pair also involves commodity currency pairs. When a commodity country declines, for example, when a decline in oil prices occurs, then the countries that import the largest oil such as the United States and Japan will experience a decline in currency prices as well.
Interest rate changes – As said before that interest rates affect forex prices. The Central Bank of each country will issue changes in interest rates in various situations that occur. In the forex market profits will accumulate within a certain period of time when a trader holds a position with a currency that has a high interest rate.
Hopefully the reviews above are useful for all of you …