The 5 Things that Move the Currency Markets

The Foreign Exchange Market
The currency market is one of the most sophisticated markets in the world, attracting trillions of dollars per day in volume from central banks, corporations, hedge funds, and individual speculators. It operates on a 24-hour basis, beginning with trading in Wellington, New Zealand, and continuing on to Sydney, Australia; Tokyo, Japan; London, England; and finally, ending with New York before the whole cycle begins all over again. Although the currency market exists mainly for importing and exporting activities and for corporations to hedge their foreign exchange risk, like all markets, there are speculators. In the forex market, it happens that 80% of all trading activity is speculative in nature. However, of all the influences on the foreign exchange markets, there are five key factors that are the main drivers of movements, and we will rank and explain them in terms of importance:

How does the off-exchange currency market work?

The off-exchange forex market is a large, growing and liquid financial market that operates 24 hours a day, 5 days a week. It is not a market in the traditional sense because there is no central trading location or “exchange.” Most of the trading is conducted by telephone or through electronic trading networks.
The primary market for currencies is the “interbank market” where banks, insurance companies, large corporations and other large financial institutions manage the risks associated with fluctuations in currency rates.The true interbank market is only available to institutions that trade in large quantities and have a very high net worth.

In recent years, a secondary OTC market has developed that permits retail investors to participate in forex transactions.While this secondary market does not provide the same prices as the interbank market, it does have many of the same characteristics.