How should a retail trader handle the market, when the market makes complicated moves? The currency pair may move by huge pips without a fundamental driver? In this situation, the market may seem to be confusing. For example, look at these announcements. There is a FOMC interest rate meeting scheduled, which is right after the good jobs number released earlier. But the market looks uncertain as to what to expect from the FOMC […]
Imagine a trader who expects interest rates to rise in the U.S. compared to Australia while the exchange rate between the two currencies (AUD/USD) is 0.71 (it takes $0.71 USD to buy $1.00 AUD). The trader believes higher interest rates in the U.S. will increase demand for USD, and therefore the AUD/USD exchange rate will fall because it will require fewer, stronger USD to buy an AUD.
Forex is a portmanteau of foreign currency and exchange. Foreign exchange is the process of changing one currency into another currency for a variety of reasons, usually for commerce, trading, or tourism. According to a recent triennial report from the Bank for International Settlements (a global bank for national central banks), the average was more than $5.1 trillion in daily forex trading volume.