How do central banks affect the forex market? - Part 1
08 August 2009 @ 12:12 am EDT
How the Fed and other central banks affect currency values is an unknown to many forex traders. This is an important topic and is not as mysterious as many traders think. In this video I will show you the primary tool G10 central banks use (debt) to manage cash rates. Central banks manage the cash rate (AKA the Fed funds rate in the U.S.) because it impacts, capital flows, growth, inflation and ultimately employment, all of which are important to economic stability. However the cash rate is an imperfect tool and often leaves the central bank in a dilemma of conflicting directives.
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