Forex traders always saw the trend and economic conditions to predict price movement of the currency pair. Many of those who always follow the fundamental data release for example such as interest rates, GDP and so on, but you can also predict future price movements in the forex market by looking at the stock market. The stock market is made up of large companies from around the world that provide its business condition report and can be used as one source of information for forex traders through the price movement of stocks or stock index, along with the world's major commodity prices such as crude oil.
Supply and demand factors
In the end the movement of the currency pairs are determined by supply and demand factors in the market. If the demand for a currency increased, the value of the currency will tend to be higher compared to other currencies. Conversely, if supply increases, the value of the currency would tend to weaken. The basic principle is influenced by several factors that cause fluctuations in the movement of the currency pairs every day. One factor is the movement of stock prices.
See the market globally
Currently the forex market is the kind of market that the world's largest, far bigger than the stock market in any country. If you discuss the interaction between the stock market and the forex market, you should look at the market conditions globally. Companies that are worthy of being used as a reference is operating internationally and make transactions with different currencies. For example, the company is the world's largest retailer Wal-Mart will more often Transact using foreign currency compared to other big companies which are not classified as a multi-national. Another big name is Coca-Cola. The second condition of the large multi-national corporations that have always cared for the forex market, especially its stock price.
The stock exchange of a great country can be influenced by the forex market. A weak currency is very supportive of the exporter in the country. If the currency is being weakened, then for its trading partner countries, the export products of the country are becoming increasingly expensive. This encourages the increased export volume which means the increase of the profit the exporter and also product manufacturers domestically. If these countries increased production growth is going up, and the stock market in the country will be more passionate. The main share price will increase, or stock price index rises. Such a situation occurred in nearly all the world's major stock exchanges are supported by major currencies like the US dollar Japan, Yen, Euro, Pound Sterling, and others.
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