Open Market Operations' Affect on Currency Trading
The Federal Reserve Bank uses the open market operations in order to determine monetary policy, which ultimately influences the currency trading market.
It is through open market operations that purchases and sales of U.S. Government securities are performed. Open market operations affect currency trading prices, employment and other fundamental analysis factors.
Through open market operations, central banks are able to influence the liquidity of foreign currency trading, and this is why traders should keep informed with these actions. Open market operations help stabilize the currency trading market, and this is one of the reasons that makes currency trading a great investment venue.
Open market operations are performed when banks transact in considerable purchases of currency trading, and in turn the currency increases or decreases accordingly. The currency trading part of money supply is called M0.
Here are a few more details you should get to know about open market operations, and that can help your currency trading strategies:
- Open market operations are used to reach target interest rates.
- With open market operations, inflation is typically measured using a consumer price index.
Posted by Greg Paster