Forex Trading Systems 4 You would like to bring you a quick update on yesterday’s post in regards to the cash rate / interest rate changes happening this week.
Australia – 1% decrease (now 4.25%)
European Central Bank – 0.75% decrease (now 2.5%)
New Zealand – 1.5% decrease (now 5%)
Sweden – 1.75% decrease (now 3.75%)
U.K – 1% decrease (now 2%)
If you’re confused about why I’d be discussing interest rates on a Forex Trading Systems website, well, I strongly recommend this article - how interest rates can affect currency rates .
Simply put, different interest rates in different countries make certain currencies more or less attractive when compared with other currencies. For example, right now, and for quite some time, Australian and New Zealand interest rates have been somewhat higher than those of other countries, so people may move money to these countries in order to take advantage of the higher interest rates.
Right now, with all countries moving their rates down, changes don’t spark too much fluctuation in currency pair values. However, interest rate announcements should always be watched closely, as at times – especially when they have not been accurately predicted – they can spark a sudden flurry of activity.
Also, over longer time periods, low interest rates will tend to be one of the factors that can drive a currency’s value down. e.g. the GBP is currently at a low value relative to other countries – in part this is due to the UK’s extremely low interest rate.
I hope that’s provided some guidance to you … a good place to check out worldwide interest rates can be found here : http://www.fxstreet.com/fundamental/interest-rates-table/
And if you’re still trying to figure out currency trading but want to get involved, remember that for forex trading beginners we recommend Pipzu.
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