Forex market is the largest market in the world in which operations on the purchase and sale of foreign currencies take place. Every day in this market, the characteristics of sales volume reach 5 trillion dollars. The difference between the Forex market and other markets is that it does not have a physical location and the main exchange. Its activity takes place through a network of banking institutions, companies, and individual traders who are provided with services by one or another international broker of the Forex market.
Forex Forecasting
In the foreign exchange market, a significant role is played by forecasting current and future market trends using available information and facts. When modeling the development direction of the economy, the stock market and individual securities, specialists rely on technical and fundamental statistics.
For example, if a trader carries out currency trading, he cannot but show interest in oil prices, although he does not directly buy and sell it. This is due to the fact that many more popular currency pairs have all chances to fall or grow depending on how the cost of a barrel of oil changes. In the past decade, the price of "black gold" has acquired the property of a necessary indicator of the global economy. According to experts, this situation will not change very soon. The relationship between the price of oil and the economies of a large number of countries has the following factors:
- From the increase in oil prices, a significant gain is gained by the economies of countries with significant supplies of crude oil;
- If the price of black gold falls, the profit is gained by the economies of countries that are dependent on commodity imports. If oil increases in value, their economy loses;
- The country's currency in the Forex market is as strong as the economy of the state to which the monetary unit belongs;
- In the event of an economic downturn, the state’s currency, which imports the oil, loses in value at the exchange rate.
Experts in the sphere of the oil market do not have a common point of view regarding the direction of prices for black gold, and also about how much its fluctuations can continue. The economic concept assumes that high oil prices limit consumer spending. This situation will remain unchanged as long as oil remains a source of hydrocarbons for the economies of industrialized countries.
The price of goods is in strong connection with the price of a barrel of oil. As oil prices increase, so does the cost of manufacturing and supplying consumer goods. In addition, the costs of individual consumers are increasing, because they have to pay more for automotive fuel and heating of their own homes. As a result, a direction is formed towards a decline in the country's economy. This lasts until the time when the degree of transformation of the downward trend into the upward one is reached.
How does this affect the currency market?
Within the framework of the foreign exchange market, exchange rates often characterize the state of health of the economy. Provided that the economy has a stable character and growth is traced in it, this will be reflected in the direction of the exchange of the national currency, which will increase in price. If the country's economy weakens, the national currency will decline in relation to the currencies of other countries. Similarly, you can set the following:
- The currencies of countries that produce oil and export it will be more expensive;
- If the country is dependent on oil imports, then its monetary unit will fall relative to the currencies of other countries when the oil market rises;
- The most profitable transactions will be concluded between the states that export oil and the countries that import it.
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