Fed rate hike – A glimpse of the impacts on Forex trading

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The entire world of Forex trading and stock markets awaits the decisions of US Federal Reserve Bank (FED). The markets eye on lowering/increase of the interest rates or the maintaining of the status quo. The decision of Fed is not only linked to the US economic health, it also affects the health of the Forex market. However, the world of Forex is also driven by the decisions of Swiss National Bank, Bank of England, European Central Bank, Reserve Bank of New Zealand, Bank of Canada (CAD), Bank of Japan, and Reserve Bank of Australia. The entire Forex market feels the palpitation of against the anticipated or a surprise announcement made by these banks. A Forex trader needs to plan or make strategy to gain out of the decisions from these leading banks the world of Forex trading take place majorly with the currencies - Swiss Franc (CHF), Great Britain Pound (GBP), Euro (EUR), New Zealand Dollar (NZD), Canadian Dollar (CAD), Japanese Yen (JPY) and Australian Dollar (AUD). commodity market, commodity prices, commodity trading, currenmarket, crude oil futures, currency rate, currency trading, daily fx,day trade, day trader, day trading,daytrading,economic calendar, foreign exchange rate, forex calendar, fundamental analysis

 So we now have a look at some of the impacts of the Fed interest hike on Forex trading:

 US dollar movement - The movement of the US dollar keeps its impact on the entire world economy as this currency takes part in major trading (not only the Forex) of the countries across the globe. And here comes the decisions of Fed that are taken to boost or strengthen US Dollar. Whether interest rates grows up or even maintains stability, the decision of Fed is to push US currency up and along with the overall economy.    

Fed increases the interest rates once it sees growth aspects of the economy. And the increase in the interest rate means the increase the yield on assets available in US currency. US dollar becomes more sought-after than other securities available in the market. This opens up an opportunity for Forex traders to buy the Dollar against weaker currencies. The increase in the value of US Dollar provides scope to invest in a broad basket of currency pairs to avoid the risks other weak currencies pose. futures market, gold futures, hot stocks, investing in stocks,metatrader,mt4,mt5,natural gas futures, oil futures, online broker, online trading, options trading, stock trade, stock broker, stock charts, stock market quotes, stock ticker 
 Adjustments of currency pairs: The Fed rate hike is always anticipated by the market. There are so many factors of increase in the interest, but traders know one thing for sure that Fed would intervene to stabilize or boost the Dollar. So the currency prices are adjusted to exchange according to the floating exchange rates to tolerate any adverse effect of a boost to the US Dollar price. So the time fed hikes the rates drastic movement in the market can be prevented to save the traders from facing losses.  stock prices, stock trading, stock trading apps,technical analysis, swing trading, trade forex, traded options, trading account, trading forex, stocks and shares, market analysis,forexlive,forex market, forex online, forex rate, forex signals

Decline or closing of carry trade: In the carry trade, with the hope of borrowing Dollar in lower interest rate and buy the currencies (of the emerging market currencies) that yields higher interest rates. But the moment Fed raises the interest rate, thereby US dollar gains its position (other currencies invested in fall) and the traders who were involved in the carry trading has to stop borrowing as their calculated profits would not be possible.   

Well, these three sections of the market are primarily affected due to Fed hike along with other sections. If a Forex trader is not aware or does not take necessary steps along the Fed interest rate hike, there could be huge losses in the trading.