By Taylor Wilman

If there’s one thing that’s exciting about forex trading is that the market is constantly changing. It would be largely up to traders to adapt with the times and make the appropriate decisions when needed. There are a number of factors that influence forex market conditions. The ones listed here affect market values more than most and deserves extra attention. Whether you are a rookie or a veteran in this craft, you’ll find this information very useful.

1. Interest rates- Interest rates in a specific country is one of the biggest determinants in stock exchange value. In fact, some nations actually use central bank interest rates as a means for controlling economic growth. An economy that is too sluggish may plunge a country into financial deficits. On the flipside, an economy that is too robust is prone to inflation. The value of a currency and its interest rate affects all stocks tied up with that currency. In fact, some traders use interest rates as a basis for evaluating transactions before they happen.

1. Employment- A nation’s employment (or unemployment) rate is one of the most important indicators of measuring a nation’s economic strength. A low unemployment rate is directly proportional to a healthy economy. Conversely, a highly functional economy makes for great business conditions, resulting to better value for assets such as stocks. More times than not, you can expect good currency value in countries that possess good employment rates. Use this statistic as a gauge for deciding which currency to focus on.

1. Political events- Events surrounding a country are among the biggest determining factors in its overall well-being. Political events can affect both international and local economies in different degrees. Countries embroiled in political scandals, financial ruin, or civil unrest are more prone to economic struggles. Not only is the country in question prone to economic turmoil, but nations they commonly transact with are equally prone. This is why political stability is one of the most important factors that affect forex market conditions.

The foreign exchange market is a dynamic system that changes in an almost minute-to-minute basis. These changes are dictated by multiple external factors. Any smart trader should take all these details in consideration as they ultimately tilt the balance of forex markets.

References:  https://en.wikipedia.org/wiki/Foreign_exchange_market , http://www.admiralmarkets.com/education/articles