Volatility of the financial markets, except by supply and demand, is also caused by everyday events, published data, and decisions by significant institutions around the world (central banks, organizations) and a number of economic indicators. Traders and investors at the world markets monitor the changes in the economic calendars and react timely aimed at higher profit realization, while the analysts and the experts are using these in interpretation of the current and future investment possibilities, or shortly, the economic indicators are presenting the health of an economy.
Most frequently monitored and essential for the development of a country are the deposit interest rates, unemployment rate, GDP, price indices, current account balance and other, which have different impact on the foreign markets and decisions by investors.
Currency trading indicates monitoring of the situation in economies where these are domicile. First indicator, which mostly impacts the movement of the financial markets in general around the world, is the federal funds rates published by the central banks by each of the countries, although they are moving at very low level (almost zero) for a longer period of time. Latest information by the US Federal Reserve’s is that two increases of these is planned (current level 0,25%) until the end of year 2023, which caused small increase of USD relative to other currencies, because the signals for increase or decline of interest rates have influence on appreciation or depreciation of the domestic currency. The European Central Bank, following the reduction of the Main Refinancing Rate to 0% in 2016, does not give signals that it would change it in near future, until certain conditions in the economy are not met (growth of inflation and employment). Swiss Central Bank has the lowest interest rate in the world (-0,75%), which has not been changed since 2015, but has intervened on the appreciated Swiss Franc by purchase of foreign currencies, whereby the Bank in year 2020 purchased 110 billion Francs, and 296 million franks were purchased in the first quarter of year 2021.
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