oussama94
05-28-2017, 18:56
If the market has uncertainty regarding interest rates, then any bit of
news relating to interest rates can directly affect the currency market. Traditionally,
if a country raises its interest rate, the currency of that country
will strengthen in relation to other countries as investors shift assets to
that country to gain a higher return. Hikes in interest rates are generally
bad news for stock markets, however. Some investors will transfer money
out of a country’s stock market when interest rates are hiked, causing
the country’s currency to weaken. Determining which effect dominates
can be tricky, but generally there is a consensus beforehand as to whatthe interest rate move will do. Indicators that have the biggest impact on
interest rates are the producer price index (PPI), consumer price index
(CPI), and GDP. Generally the timing of interest rate moves is known in
advance. They take place after regularly scheduled meetings by the Bank
of England (BOE), the U.S. Federal Reserve (Fed), the European Central
Bank (ECB), the Bank of Japan (BOJ), and other central banks.
news relating to interest rates can directly affect the currency market. Traditionally,
if a country raises its interest rate, the currency of that country
will strengthen in relation to other countries as investors shift assets to
that country to gain a higher return. Hikes in interest rates are generally
bad news for stock markets, however. Some investors will transfer money
out of a country’s stock market when interest rates are hiked, causing
the country’s currency to weaken. Determining which effect dominates
can be tricky, but generally there is a consensus beforehand as to whatthe interest rate move will do. Indicators that have the biggest impact on
interest rates are the producer price index (PPI), consumer price index
(CPI), and GDP. Generally the timing of interest rate moves is known in
advance. They take place after regularly scheduled meetings by the Bank
of England (BOE), the U.S. Federal Reserve (Fed), the European Central
Bank (ECB), the Bank of Japan (BOJ), and other central banks.