Crude Oil Prices May Resume Forex on API Inventory Data. FX Markets Turn to Central Banker Speakers, RBNZ Decision, Canadian CPI. USDJPY Moment of Truth: Rally Attempts Breach of Key Slope Resistance. Nikkei Looks Comfortable at the Top. Gold Prices Continue Descent Through Key Support Zone. Extreme in Euro Speculative Longs Grows, Crude Oil Specs Hit Bids. Short Term Strategies, Scalping, Price Action Analysis, and Risk Management. Fundamental analysis in Forex studies economic factors that cause shifts in buying and selling patterns of traders. As demand increases flows a currency so does its value. Likewise as money flows out of a flows its value begins to decrease. To get a better flows on how these movements affect the market, today we will forex capital flows and interest rates. Capital flows describes flows flow of funds in to or out from a particular currency. Normally this flow is directly related to capital investments inside of a particular country. This means money would flow into the USD from another currency to make the purchase. The logic from here is one flows supply and demand. If capital inflows exceed outflows that means there is a demand flows countries currency. This can provide fundamental trading opportunities as for traders as prices rise to accommodate the new demand. This is also true with a net capital outflow. As there is less demand for a particular countries currency, we would expect a fundamental opportunity to place new sell orders. Interest rates are important to capital flows. As investors, speculators, and traders in general all look to maximize their returns they tend to look towards higher yielding investments. That means countries with the highest interest rates, and best economic data tend to see their countries strengthen due to capital flows. Forex way to track capital flows is by monitoring economic data on the economic calendar along with central bank releases. Central banks are charges with setting the banking rate that is associated with their currency. As this value changes, so will demand for a particular currency pair. Below we have a monthly chart of the EUR AUD. From to present, the EURAUD has declined as much as 10, pips! Why did this happen? The key to understanding this cart is in capital flows. At its peak during this time the central bank target rate as set by the RBA for the AUD was at 4. This is considerably higher than the 1. Traders and investors alike looking to take advantage of this yield differential were forex selling Euros while purchasing the Aussie Dollar. This allowed forex to collect rollover for holding open their position. Along the way as more traders caught on and demanded more Aussie Dollars, positions began to also gain capital appreciation as the chart began to trend lower. Traders who look specifically for this long term yield are known as carry traders and will continue to hold a currency pair as long as capital flows remain in their favor! To learn more about the carry trade, read up on the strategy HERE at the DailYFX University. As a fundamental trader, it is important to know how different events affect the valuation of a currency. To follow along with the market and to forex yourself with capital flows in Forex, make sure to sign up for a Free Forex Demo account with FXCM. This will allow you to monitor, track and trade currencies in real time. This will conclude our second look at Forex fundamentals! If you missed one of the previous editions of The Fundamental Guide to Forex, please enjoy the articles linked below. The Forex Guide to Fundamentals, Part1: What is a Fundamental? To contact Walker, email instructor dailyfx. Follow me on Twitter at WEnglandFX. New to the FX market? Save hours in figuring out w hat FOREX trading is all about. In the course, you will learn about the basics of a FOREX transaction, what leverage is, and how to determine an appropriate amount of leverage for your trading. Register HERE to start your FOREX learning now! DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Market News Headlines getFormatDate 'Tue Jun 20 Technical Analysis Headlines getFormatDate 'Tue Jun 20 Nikkei Looks Comfortable at the Top getFormatDate 'Mon Jun 19 Education Beginner Intermediate Advanced Expert Free Trading Guides. News getFormatDate 'Tue Jun 20 News getFormatDate 'Mon Jun 19 forex News getFormatDate 'Sat Jun 17 Short Term Strategies, Scalping, Price Action Analysis, and Risk Management Connect via: Capital flows calculates money moving in and out of a currency Economic events and interest rates all affect capital flows Carry Traders look to take flows of interest rate differentials Fundamental analysis in Forex studies economic factors that cause shifts in buying and selling patterns of traders. Upcoming Events Economic Flows. Forex Economic Calendar A: NEWS Articles Forex Time News Daily Briefings Flows DailyFX Authors. CALENDAR Economic Calendar Forex Calendar Central Bank Rates Dividend Calendar. EDUCATION Forex Trading University Trading Guide. DAILYFX PLUS RATES CHARTS RSS. DailyFX is the news and education website of IG Group.
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If this means California has a larger population, then this means higher land prices.