Fundamental traders keep a eye on Central Banks and the policy decisions they make. Those intuitions, through changes in monetary policy, not only can affect an underlying economy but by de facto currency rates as well. Today we will continue our look at market fundamentals by examining Central Banks and how their policy decisions can affect Forex prices.
Central Banks
Central Banks are institutions used by nations around the globe to
assist in managing their country or region with the commercial banking
industry, interest rates, and currency prices. Examples of active
central banks include the Federal Reserve of the United States, European
Central Bank (ECB), Bank of England (BOE), Bank of Canada, and the
Reserve Bank of Australia (RBA). The sphere of influence of a central
bank may range from a single country such as the Reserve Bank of
Australia or, represent policy created for a region or group of
countries such as the ECB. Because of this, the actions of Central Banks
have the ability to move markets and should be on every fundamental
trader’s radar.
Central Banking Rates
Policy Decisions
Policy decisions and economic releases from Central Banks will occur sporadically throughout the month. The best way to track upcoming news is through the use of a good economic calendar. As these decisions are made, it is also important to track the movements of the market!