Trading Forex on PrimeXBT and other portals is becoming more popular, so much so that April 2021 clocked $2.98 billion in trade turnover. What do these figures mean? In April 2020, the turnover stood at $2.58 billion–representing a 20 percent increase in the past year. Forex trading is growing, although the figures here seem a bit outdated, they have consistently highlighted an upward trend over the years.
Currencies pick up and drop every minute, though not in a significant sense like in other markets. The small trends are the main pillars that drive the market, together with political and economic factors in respective countries. EUR/USD remains the most traded currencies in London and virtually all Forex markets deducing from data on PrimeXBT. However, GBP/USD, USD/JPY, and AUD/USD also have a significant share of trades in various markets. Understanding currency movements helps explain why many traders are curious to know what is Forex trading and why are we referencing it all the time.
What Are The Main Factors Driving The Current Forex Market?
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COVID-19 is right at the top of the list of factors to watch in all markets. However, a steep rise in commodity goods in the third quarter extending to the last financial period has become a giant. Noteworthy, in as much as COVID stacks high, inflation is a keen aspect that influences central bank decisions. An increase in interest rates will stir a bullish trend towards a particular currency, and the reverse is true when the central banks cut the interest rates. Many Forex markets on PrimeXBT are on their toes, any sign suggesting a cut in interest rate will ignite the markets.
COVID-19 is the driver of the current inflation; it follows a long period of reduced activities during the lockdown period to slow the spread. Once the economies opened up, manufacturers could barely keep up with consumer demands, making the existing goods in the market costlier. Major markets in North America, the Eurozone, and the U.K. have all seen sharp rises in consumer goods following the bottlenecks from supply chain issues that rocked the world.
The U.K. witnessed its inflation touching 4.2 percent, a situation last seen ten years ago, while that of the Eurozone increased and settled at 4.9 percent.
While chaos has rocked many markets because of shortages, central banks have refused to act, with cautioning stances that once supply catches up, inflation will tank to figures before the pandemic.
Forex Markets Outlook In 2022
The U.S. expects a hike in interest rates; this will come in the second half of 2022. Such speculation will surely encourage a bullish market in the weeks leading to the expected increase in interest rates. The situation surrounding COVID-19 will help gauge future demand and supply curves. However, a soothing aspect is that the markets will surely calm, as manufacturers are working to fill the shortage gaps heading into the festive periods.
The European markets will see little to no change in interest rates come 2022. European banks, especially the European central bank, are looking for market forces to help reduce the inflation rate. The Eurozone is particularly in a hot economic position compared to the U.S. or U.K. market; it has one of the largest unemployment rates compared to the other major markets, a situation that makes it take a cautionary approach.
Divergent actions by various central banks will probably encourage movements towards some currencies. Actions by the bank of Japan also make the Yen a risky undertaking; the dovish bank has done little effort to remove pressure from it during the year.
Omicron, the new COVID-19 strain, is also an additional factor; it shows the volatility of the Forex market—a slight change in the political or economic senses can make any currency a risk-on trade. The new strain might frustrate the current economic gains after a successful vaccination drive in many markets, further frustrating Forex turnover in April 2022.
The Forex market, as data streams from PrimeXBT shows, is important, and future projections show it will continue to grow.
COVID-19 has slowed down some markets, but April 2021 has shown strong defiance to negative growth—a positive heading into 2022. Actions taken by central banks to caution the prevailing inflation rate will frustrate the Forex market in 2022. However, past projections that show consistent growth should increase investor confidence.
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