What are the important fundamental news that every trader must monitor

Many currency traders ask, what are the main fundamental news that should follow and which to comply with the decision to trade. This article will explain why the interest rate movements are important for the value of currencies. Each currency has an interest rate that is as a barometer of the strength or weakness of a particular economy.

When the economy strengthens over time, prices tend to grow as consumers are able to spend more of their income. The more money you earn, the greater the quantity of goods and services consumed. A trend of a large amount of money and relatively unchanged quantity of goods, leading to higher prices and inflation.

If inflation can be increased unregulated, our money will lose much of their purchasing power and ordinary goods like bread one example, may one day reach incredibly high prices of $ 100 for bread. That sounds like a far-fetched scenario, but this is what happens in countries with very high inflation rates, such as Zimbabwe. In order to stop this danger before it gets late, the central bank intervenes and raises interest rates to stem inflationary pressures before they spiral out of control.

Higher interest rates make money employed more expensive, which in turn deters consumers from buying new homes, the use of credit cards and borrowing additional funds. More expensive money discourage corporations to expand, Tuck as much of the business is financed through loans.

Ultimately, higher interest rates will assume their role of slowdown until the central bank will begin to cut interest rates. This time, the tariff reduction aims to promote economic growth and expansion. The central bank has the delicate task of stimulating economic growth while keeping inflation low.

A side effect of high interest rates is that foreign investors wishing to invest in this country. The logic is what in any investment - investors seek the highest possible return.

Higher interest rates, the return of those who have invested in this country is increasing. Thus, there is increased demand for the country's currency as investors invest where interest rates are higher.

Countries that offer the highest return on investment through high interest rates, economic growth and growth in domestic financial markets, attract more foreign capital. If the stock market of the country is doing well and offer higher interest rates, foreign investors are reluctant to invest in this country. This increases the demand for currency vaotvetnata and leads to a rise in its value.

The direction of interest rate stated by the central bank, together with a decision to target pace. The accompanying statement is analyzed word by word, to find some sign of what may take the bank in the next meeting. Remember that the level of the interest rate itself is less important than the future expectations of its movement.

High and rising interest rates in the beginning of economic expansion can generate growth and additional value of the currency. On the other hand, lower and lower rates may indicate that the country is going through difficult economic conditions, which is reflected in the decrease in the value of the currency.

In early 2009, the global economy was on the bottom, when lending in the United States began to thaw. The Federal Reserve kept US interest rates at the lowest levels of all time, while the Reserve Bank of Australia began the process of raising their interest rate to a certain target level.

Since it was the beginning of an economic expansion, foreign investment in Australian companies needed Australian dollars to invest. Then Forex traders started to buy the currency pair AUD / USD in anticipation of increasing demand for the Australian dollar.

These traders were rewarded when the exchange rate of the currency pair AUD / USD began a 30-cent increase between 2009 and 2011 Purchase of a mini lot of 10,000 units would bring someone trader over $ 3,000 plus interest