The price movements on the foreign exchange Sydney are shaped by a number of different factors. However, there are 4 that you should pay particular attention to. These 4 factors have a greater impact on the market than any of the other factors. It is important that you know what these factors are and how they affect the market.
The Impact of the Governments
Governments have a much larger sway on the foreign exchange Sydney than most traders would like to admit. The fact that the forex market is a free market and most exchange rates are floating makes traders think that the government does not have much of a say. The fact is that many governments may not have a sway on the actual trading on the market, but they can affect the prices.
Monetary policies that are controlled by the government will affect the price movements on the market. It is the government or central bank that sets the interest rates and manages inflation. These are two of the major factors that affect currency pair prices. When you trade on the forex market you have to consider what the government and central bank will be doing.
Transactions on the Foreign Exchange Sydney
The second major factor that shapes the market is the transactions that occur on the forex market. These transactions could be done by large banks and institutes. Many of these large transactions will cause trends to appear in the market. The longevity of the trend depends greatly on who is trading and how many other traders ride the trend. The more traders riding the trend the more momentum it will have. However, there will come a time when all trends slow down and start to lose momentum.
When you trade on the foreign exchange Sydney you have no way of anticipating when these large trades will occur. There may be some warning signs, but there may not be. If you are trading in the opposite direction you may have to accept the loss.
The Speculations on the Market
When you deal with any financial market you have to consider what the expectations and speculations are. There will always be some expectations and speculations. This is often linked to fundamental information related to the market. If a news release is due traders will speculate on what the release will say. There will also be expectations for what the release is going to say.
What the release actually says will affect the market according to the speculations and expectations. If the release confirms the expectations then there may be no movement on the market. However, if the release counters the speculation then there will be a movement.
The Effect of Supply and Demand
The age old concept of supply and demand is one of the factors that affect the forex market. There are a number of ways that this can affect the market that you should know about. The main way is through the demand for a certain currency. When there is high demand there will be a positive reaction in the currency value. This will cause a reaction in all the currency pairs that this currency is part of.
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