The RBA kept the key interest rate on Tuesday, leaving the door ajar to further stimulate the economy if necessary.  

The US Federal Reserve maintained its key rate in the range of 2.25-2.50 percent and announced that it will be patient with regard to its possible increase this year, pointing out the uncertainty of the forecast for the American economy. Although the regulator noted that the most likely scenario is the continued growth of the US economy and the labor market, phrases appearing there in December that the risks for the economic outlook are “generally balanced” and a further increase in rates would be appropriate in 2019 disappeared from the statement.

Just a little over a week ago on the weekend of Friday, July 6th, UK Prime Minister Theresa May gathered her cabinet at her ‘Chequers’ country residence in order to put her foot down on a soft version of Brexit. Many claimed it was a make or break moment and as Monday approached it was hailed as a success and that her Conservative Tories rallied behind her in order to deliver a united front on her version of Brexit to her EU counterparts.

Since the great recession, a large number of advanced economies have been stuck with low growth and low levels of investment and inflation. Attempting to regain growth, central banks have taken increasingly forceful monetary measures. Of these, perhaps the most controversial and least understood is negative interest rates.

The carry trade is one of the most popular trading strategies in the currency market. Mechanically, putting on a carry trade involves nothing more than buying a high yielding currency and funding it with a low yielding currency.

In the forex market rollover is the process of extending the settlement date of an open position. In most currency trades, a trader is required to take delivery of the currency two days after the transaction date.

Currency prices are what the market is all about, but interest rates have a direct effect on those prices. Therefore, to be able to understand the current foreign exchange market you have to understand the current conditions of each individual interest rate.