Continuing with the last post, some of the important & core factors every FX trader should know. Below are three crucial fundamental indicators, using which appropriate trading decision can be taken.
Interest Rate
Generally, as the interest rates increases the currency of that country will increase. As FIIs sell their own currency and buy INR to pay for the Financial Units.
If you feel interest rate in India is at top & has little upside, you should buy a currency with a higher interest rate.
Gold Prices
Usually Gold is the best hedge against inflation & as we see increase in Gold prices one can assume the currency particularly USD will fall. So selling USD against a currency of Gold producers. For example, Australia is the world's third largest exporter of gold, and Canada is the world's third largest producer of gold.
So, if gold breaks its resistance & moves north it make sense to build long positions in Australian or the Canadian Dollar.
Oil Prices
As with the gold so with the oil. The country's degree of dependency on oil from foreign countries makes its currency more vulnerable to oil prices than other countries. Similar to Gold, if you believe oil prices are going to increase, you should sell oil dependent country’s currencies like USD & Yen & buy Oil producing country’s currency.
Note: Above article is for educational purpose only & one should consult his financial advisor before taking any action.
Please check the Disclaimer on this blog.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment