Forex exchange rates in a plain language can be referred to as the amount of money in one currency that needs to be given up in order to obtain its equivalent value in another currency. these are rates are published daily and are subject to change. The forex exchange rates come in currency pairs e.g. USD/AUD, CHF/USD, AUD/CHF and a host lot of others. The exchange rate of any currency pair can be used to study the past, present and future behavior of a currency pair in the forex market.
FACTORS THAT CONTROL THE FOREX EXCHANGE RATES
1. THE ECONOMY
The US economy is one of the major controllers of the forex exchange rates since it controls the exchange rate of the U.S dollars, the most traded currency in the world. An increase in the U.S economy will affect all other exchange rates and vice versa. Apart from the U.S economy, the economy of the other currency in the pair is also a determining factor of how well the currency will fare in the market. For example, AUD/USD currency pair is controlled by both the Australian and U.S economy.
2. FORCES OF DEMAND AND SUPPLY
The higher the demand for the currency pair, the higher the value and vice versa. Most of the times, the forex exchange rates are affected by the increase or decrease in the international trade in the country which will increase the need for exchanging currencies.
3. COMMISSIONS AND LEVERAGES
Commissions charged on trading in the currency and the leverages also goes a long way in determining the forex exchange rates.
ADVANTAGES OF STUDYING FOREX EXCHNAGE RATE TODAY
By studying the Forex analysis for today, the trader will enjoy the following advantages;
1. ABILITY TO PREDICT THE TRADE OUTCOME
The Forex analysis for today comes in the form of tables and charts which the trader can easily study in order to obtain first hand information concerning the market value of the currency pair of choice. This information can be used to predict with some level of accuracy, the market behavior of the currency pair.
2. PROVISION OF INFORMATION
The major aim behind the daily forex rates is to serve as a source of information about the nature and behavior of the currency pair in the market. With the daily forex exchange rate values, the trader can be able to gain an insight into the currency market and know how well or bad the currency is faring in the market.
3. IT IS USED IN PLANNING
Forex trade is for traders who are willing to take calculated risks in order to obtain results. With the daily forex exchange rate, the trader can be able to sit and plan on the best way and time to invest into the market in order to obtain maximum profit. The rates will give the trader a signal on the best time to either enter or leave the market.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.