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FX International Payments
Foreign exchange rates are heavily influenced by the political, economic and financial fortunes of the markets they operate in.
This means you need to know what's happening and when to ensure you don't get caught out trading at inopportune times.
Watch this short video for a look at the key indicators you need to be aware of and when to watch for them.
The global nature of financial markets means political and economic events play a major role in influencing exchange rates.
The key areas of information to watch can be broadly categorised as capital markets, international trade, political events and economic news.
Performances in capital markets are important to track as they may influence the direction of a country's currency. It's often the case that equity and bond markets figure out what's happening before wider economic fortunes and currencies follow.
Next, you need to look at international trade balances.
A trade deficit means a country is a net importer of international goods and services, so more of the local currency will be sold to pay for goods and this generally leads the currency lower. And, all else equal, a trade surplus will push the currency higher.
Government policy is another big influencer of a country's economy, and therefore foreign exchange markets.
Elections, policy changes and the balance of power are all important to gauge currency direction.
Also wrapped up in politics are central banks. Any moves that may impact interest rates or exchange rates are to be watched closely.
Economic releases are the other key mover of exchange rates.
Gross Domestic Product is important, as are inflation and unemployment data, manufacturing indexes, retail sales, building approvals and lending levels. Preferably you're looking for leading indicators, but it all adds to the big picture so best stay across all key releases.
As to the important dates to watch out for, financial reporting seasons and large government debt issues are worth noting down, as are key data releases by the national statistics agency, government election terms and the central bank meetings.
By staying on top of market moving information, you can make rough forecasts and plan a proactive foreign exchange strategy that ensures you're not caught out trading at especially volatile times.
That said, an informed foreign exchange provider with a dedicated account manager will cover all these events and strategic implications for you.
The information contained in this document has been prepared for general information and educational purposes only without taking into account your objectives, financial situation or needs and is not designed to substitute for, or replace, a professional opinion about any particular business or situation or judgment about risks or appropriateness of any financial or business strategy or approach for any specific business or situation. This document is not a substitute for professional advice.
You should read the Terms and Conditions and consider the appropriateness of International Payments in relation to your individual requirements. For further information, please refer to the relevant Terms and Conditions
Important Note: Articles, comments and any other materials available on or through the FX International Payments website represent the views of their author and do not reflect the opinions or analysis of the American Express Company or any of its affiliates, subsidiaries or divisions. American Express makes no representation as to and is not responsible for, and does not validate, any information, opinions, assertions or statements expressed in any such materials, or the identity or credentials of the individuals communicating through the site. Information available on the site does not, and should not be relied upon to, replace the advice of your own professional legal, tax and financial advisors.
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