Are Central Banks major players in the Forex markets?
|Are Central Banks Major Players In The Forex Industry?
The short answer is yes; in fact central banks are what the whole Forex industry revolves around. More specifically their commentary and decisions they make will impact interest rates. Every time something happens, every time the news comes out, a professional trader will be looking at it and their first thought will be, how this will impact how that central bank adjusts their interest rates.
Their thought process will be; will any particular news event make the central bank more likely to decrease rates or increase rates? They’ll subsequently trade the currency in that direction, if for example it’s an increase they’ll buy it and if it’s a decrease they will sell it.
That is essentially the most important question you need to be asking when trading Forex and the central banks when they make these decisions will literally move the price hundreds sometimes even thousands of pips just with their words and almost certainly with their actions.
So to sum up central banks are major players in the Forex industry and perhaps the most pivotal aspect you need to be watching when trading the currency markets.
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