The global foreign exchange market is driven by two simple components: supply and demand. However, these basic principles apply not only to goods and services, but also to the general situation in the country. One important aspect is the holiday season. global foreign exchange market Stop the constant interaction.
External factors play an important role in shaping forex trends. For example, the Russia-Ukraine war caused fuel prices to skyrocket. Houthi rebels are attacking random ships in the Red Sea, causing problems for major economies.
Red Sea Crisis and Foreign Exchange
The Red Sea forms an integral part of trade. But the Houthis have attacked ships at random, saying they would affect Jewish shipping, putting the main economy at risk. Many companies had to stop traveling or take the longer route via Cape Good Hope.
Until the economy realizes this, it sounds certain. red sea crisis In the end, the trip became longer and more expensive. For reference, the China-Europe trade trip takes approximately 37 days. Now it takes 49 days. Because the cost is calculated based on the distance traveled The overall figure, including raw materials and oil, has increased significantly.
Holiday Season and Forex Trends
As much as it is reflected in the calendar, it is also reflected in the foreign exchange market. The holiday season brings constant disruption. forex trading. So it affects the speed. forex investment Perform. What has a major impact on this sector is lack of liquidity and high volatility.
that much foreign exchange market We take a break on December 25th and December 26th, and finally welcome the new year. The interim period is considered an ideal time to revise the theory. For example, the US Dollar Index hit ~101.40. But the euro is gaining traction. Traders looking at their portfolios for higher returns as they step back from the market may be more interested in these potential updates.
Gold and Forex Relationships
It is no surprise that the global gold market is priced in terms of the US dollar. Losses in the FX market are ultimately losses in the global gold market. At the time of drafting this piece, the asset price is $2,032.30. Local currencies that incur higher conversion costs will have to shed more tears.
January will likely mark the return of gold. This is when the markets open during the holiday season. foreign exchange economic changes This is better reflected, with many investors taking some profits. Additionally, gold serves as a long-term store of value.
Currency changes and foreign exchange impacts
Currency changes are associated with changes in the central bank’s monetary policy. USA For example, the Federal Reserve has been teased that it will begin cutting interest rates in the middle of this year. This is based on the assumption that inflation will have fallen below 2%, or at least close to that level.
The rate cut will have a ripple effect, as many countries are holding off on implementing it. The Bank of Japan (BoJ) is similarly expected to end its easing policy practices. The Yen has recently risen in value and any change in the exchange rate for either currency will affect areas that trade heavily in USD and/or JPY.
Commodity and foreign exchange market dynamics
The price of the product or the price of the product leaves an indication. forex currency change. This is understandable, considering how long Russia has been under sanctions for its conflict with Ukraine. The country has restricted the exchange of USD for purchases, driving up prices and putting pressure on those wanting to buy.
The USD’s low or limited utility puts it in the bag, paving the way for other currencies to be stored in bilateral trade.
conclusion
All global events ultimately connect the dots. The Red Sea crisis will increase transportation costs and shift the burden onto regions and residents. Likewise, during the holiday season, liquidity in the foreign exchange market is low and trading volumes are low, giving investors and traders a break. It’s safe to assume there will be a ton of updates in January.