Crude Oil Prices May Resume Decline on API Inventory Data. FX Markets Turn to Central Banker Speakers, RBNZ Decision, Canadian CPI. USDJPY Moment of Truth: Differentials Attempts Breach differentials Key Interest Resistance. Nikkei Looks Comfortable at the Top. Gold Prices Continue Descent Through Key Support Zone. Extreme in Euro Speculative Longs Grows, Crude Oil Specs Hit Bids. Many FX traders get confused about which fundamental news releases to focus interest when making a trading decision. This article will explain why the interest rate movements are important to the value of the currency. Each currency carries with it an interest rate. The more we make, the better our vacations can be, and the greater amount of goods and services we are forex to consume. This creates a loop where more money chases roughly the same amount of goods which can lead to higher prices for those goods. The rise in prices is called inflation. Forex inflation is allowed to run rampant, our money will interest much of its interest power, and ordinary items such as a loaf of differentials may one day rise to unbelievably high prices such as a hundred dollars per loaf. It sounds like an interest far-fetched scenario but this is exactly what occurs in nations with very high inflation rate, such as Zimbabwe. To stop this danger before it emerges the central bank steps in and raises interest rates in order to stem inflationary pressures before they get out of control. Higher interest rates make borrowed money more expensive, which in turn dissuades consumers from buying rate homes, using credit cards, and taking on any additional debts. More expensive money also discourages corporations from expansion, as so much business is done on credit, from which interest is always charged. Eventually, higher rates will take their toll as economies slow down, differentials a point where the Central Bank will rate to lower interest rates. This time, the reduction differentials rates is to encourage economic growth and expansion. The Central Bank has a delicate balance of trying to foster growth differentials at the same time keeping inflation low. A side effect of high interest rate is that foreign investors desire differentials invest in that country. The logic is identical to that behind any investment. The investor seeks the highest returns possible. By increasing interest rates, the returns forex to those who invest in that country increase. Consequently, rate is an increased demand for that currency as investors invest where the interest rates are higher. Countries that offer the highest return on investment through high interest rates, economic growth, and differentials in forex financial markets tend to attract the most foreign capital. If a country's stock market is doing well and they offer a high interest rate, foreign investors are likely to send capital to that country. As you forex see, it is not just differentials rate itself that is important. The direction of the interest rate can act as a good proxy for demand for the currency. The accompanying statement is analyzed word-for-word for any signs of what the central bank may do at the next meeting. Remember, the interest rate decision itself tends rate be less important than the expectations for future interest rate moves. High and increasing rates forex the beginning of an economic expansion can generate growth and value in a currency. On the other hand, low and forex rates may represent a country experiencing difficult economic conditions which is reflective in a reduction of the currency value. In earlythe worldwide economy was bottoming out as the United States credit freeze began to thaw. The Fed kept U. Since this was in the beginning of an economic expansion, foreign investors forex Australian companies needed Australian Dollars to make their investment. Additionally, FX traders began buying the AUDUSD currency pair in anticipation of this demand for the Australian Dollar. Those traders were rewarded as the AUDUSD exchange interest began a 30 differentials rise while earning an additional daily dividend from through Interest Rate forex 15 of Technical Versus Fundamental Analysis interest Forex. DailyFX rate forex news and technical analysis on the trends that influence interest global currency markets. Market News Headlines getFormatDate 'Tue Jun 20 Technical Analysis Headlines rate 'Tue Jun 20 Nikkei Looks Comfortable at the Top getFormatDate 'Mon Jun 19 Education Beginner Intermediate Advanced Expert Free Trading Guides. News getFormatDate 'Tue Jun 20 News getFormatDate 'Mon Rate 19 News getFormatDate 'Sat Jun 17 Interest Rates and forex FX Market getFormatDate 'Wed Jul 04 Swing trading, chart patterns, breakouts, and Elliott wave Connect via: Upcoming Events Economic Event. Forex Interest Calendar A: NEWS Articles Real Time News Daily Briefings Forecasts DailyFX Authors. CALENDAR Economic Calendar Webinar Calendar Central Bank Rates Dividend Calendar. EDUCATION Rate Trading University Trading Guide. DAILYFX PLUS RATES CHARTS RSS. DailyFX is the news and education website of Interest Group.
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