News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here: https://t.co/vg7w10la3j https://t.co/LqAfNPnzSN
  • Alibaba's share price surged 8.8% after its founder Jack Ma reappeared after months out of public view. - BABA (+8.8%) - Tencent (+3.36%) - Meituan (+8.04%) - Xiaomi (+1.75%)
  • German Covid deaths increase by 1,734 - BBG
  • Trump grants full pardon to Stephen Bannon, Elliott Broidy - BBG
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 100.00%, while traders in EUR/JPY are at opposite extremes with 64.67%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/dKgoDeibwS
  • China's wealthiest person, Jack Ma reportedly released a video supporting a program for rural teachers. He hasn't been seen since the Chinese gov't rejected his company's, Alibaba, IPO. Notably, $BABA was up 3.4% this past session
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.39% 🇨🇦CAD: 0.20% 🇳🇿NZD: 0.19% 🇯🇵JPY: 0.15% 🇪🇺EUR: 0.12% 🇨🇭CHF: 0.10% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/kYm9OmSCbN
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 0.22% US 500: 0.09% Wall Street: -0.06% Germany 30: -0.08% France 40: -0.21% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/vv3latjbho
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM73cHA https://t.co/Jeiti9RSA5
  • WTI breached above a key chart resistance of US$ 52.03 (127.2% Fibonacci extension) and has since opened the door for further upside potential with an eye on US$ 55.23 (161.8% extension). Prices are trending higher within an “Ascending Channel” as highlighted on the chart below. https://t.co/EF2YQGZEz3
The FX Market and Interest Rates

The FX Market and Interest Rates

Thomas Long, Course Instructor

Higher interest rates usually lead to a higher currency value while lower interest rates usually lead to a lower currency value. When the interest rates are rising in one country, investors from around the world will buy that country's currency to invest in the bond market to lock in those higher interest rates. This flow of money has a great influence on the value of that country's currency as the buying interest pushes up the value of that currency. 

You can find the interest rate associated with each currency on the first page of DailyFX.  Here is today's snapshot.

rates 621

Interest rates also determine the amount of rollover credited or debited to one's account at the 5PM Eastern close.  Rollover is the interest paid or earned for holding an FX position overnight. As we now know, each currency has an interest rate associated with it, and because FX is traded in pairs, every trade involves not only two different currencies, but their two different interest rates. If the interest rate on the currency you bought is higher than the interest rate of the currency you sold, then you will earn rollover (positive roll). If the interest rate on the currency you bought is lower than the interest rate on the currency you sold, then you will pay rollover (negative roll). Rollover can add a significant extra cost or profit to your trade. Traders who look to take advantage of this rollover interest are referred to as carry traders. These carry traders also have a big influence on the value of currencies as those pairs that pay the most in interest generate the most buying interest which in turn, pushes the value of those currencies with higher interest rates even higher.

You can find the rollover amounts in the Simple Dealing Rates window of the FX Trading Station II.  Here is an example which shows that a trader would earn 93 cents a day for each EUR/AUD standard lot open sell position at the 5PM Eastern close.  A trader who has a standard lot open buy position at the 5PM Eastern close would pay $2.00.  This is the result of the interest rate associated with the EUR at 1% while the interest rate associated with the AUD sits at 4.50%.

roll 621

 

 

 

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES