The forex markets can be an extremely daunting prospect for new traders, especially if you’re unsure which currencies to trade. Understanding a little bit about the major currencies and their governing bodies can provide you with some useful information.
US Dollar and Forex.
The US Dollar is governed by the Federal Reserve. The Federal Open Market Committee (FOMC) is a 12 member board that votes on monetary issues and sets interest rates at meetings held every six weeks. The currency itself is influenced by gross domestic product, manufacturing and employment data and interest rates. It’s widely used on the forex markets as a benchmark for other major currencies, including the Euro, Yen and British Pound.
Euro and The Forex Market
This currency is maintained by the European Central Bank on behalf of the 17 members of the Eurozone. The Executive Council heads up the decision making process and they meet around 10 times a year. In order to ensure consistency, the major economies of France, Germany, Italy and Spain always have a presence on the Council. Their main aim is to maintain a stable currency. Generally, this is a slow moving currency, with only minor swings occurring in trading sessions.
Japanese Yen and Forex
The Bank of Japan is in charge of the Yen and key decisions are taken by the Monetary Policy Board. They meet around 12-14 times over the course of a year and the board consists of a Governor and nine other members. The Yen can be a particularly volatile currency, with both extremely low lows and high highs occurring across the markets.
British Pound and Forex
The Bank of England’s Monetary Policy Committee operates this currency. The Governor and nine members meet every month to discuss economic issues and set interest rates. Their key aim is to keep consumer inflation at around 2%. The highs and lows of the Pound can vary widely and the majority of trades occur when the London and New York markets are open.
Swiss Franc and Forex
The Swiss National Bank operates slightly differently to others across the world, as it’s both a public and private enterprise. More than 50% of the governing body is operated by the country’s sovereign states. It’s headed up by those in charge of three of the major banks and they meet every quarter to determine the interest rate band. As with the Euro, there are rarely any major moves within an individual session.
Canadian Dollar and Forex
The Bank of Canada is an independent commodity, but the Ministry of Finance remains a shareholder. The Governor needs to maintain impartiality, but also take into account the interests of the Government. It has goals of keeping inflation low, maintaining a secure currency and providing a stable economy. On the forex markets, the Canadian Dollar trades within fairly stable ranges and also has a close relationship with crude oil, as it’s a major exporter.