Companies involved in the exchange of goods and services across borders often need foreign currency to ensure that imports and exports flow smoothly.
In addition, to limit the risk associated with volatility, multinationals often hedge their positions in the market.
Large companies regularly execute billions of contracts to meet their business needs and offset risks.
2. Hedge Funds Hedge funds are basically short-term speculators in the foreign exchange market.
They are known for getting in and out of deals quickly.
Most of their entries are usually based on influential news such as NFP, unemployment rate changes, retail sales data and figures, decisions, non-agriculture, etc.
3. Commercial Banks Most large commercial banks have trading departments.
They are conducted for high net worth clients and the bank itself.
Banks are connected through the electronic brokerage service (EBS) or the Reuters platform.
The interbank foreign exchange market actually represents the core of the spot;
Large corporations, banks, hedge funds and other non-bank financial institutions all trade in the market to meet demand.
4. The Central Bank The central bank is the government body that makes the country.
The powers of a central bank are usually determined by the government.
Therefore, the decision is not about profit.
When a country’s currency volatility becomes very high, the central bank may intervene in the foreign exchange market after verbal messages have failed.
These interventions are first and foremost in the national interest and often run counter to market opinion.
In theory, the rich world’s central banks have unlimited buying and selling power.
Central banks can also influence exchange rates by raising or lowering benchmark interest rates.
Political instability in Europe, the resignation of Mario Draghi and the prospect of higher interest rates in the euro will not ease the selling pressure on the euro.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.