The forex market is not the only financial market that you should consider when you look at trading FX rates. There are other markets that will have an impact on the FX rates and you should consider this. There are many traders who analyse the link between the different markets to find the best times to trade on the forex market. You should consider what the other markets you should look at are and how they will affect the forex market and your FX rates trading.
The Bond Yields Market
The bonds market and the currency market are actually very closely linked. When there is a movement on the bonds market you are likely to see a movement on the forex market. This is due to the movement on both markets being driven by the economy of the different countries. When the country is stable then there will be a positive impact on both of the market. However, when the economy is unstable there will be a negative impact on both markets.
If you are going to trade with this link then you should be looking at the short-term bond patterns. These are often used as a confirmation of the trends that you find on the forex market. Of course, you have to be careful when you use this market. You need to understand the risks of bond market analysis and know what it is that you are doing.
The FX Rates Futures Market
When you look at the FX rates futures market you are looking at another financial market that trades the forex rates. The trades that are completed on this market can tell you about what is going to happen on the forex spot market. There are many trades who use the futures market to gain market sentiment for their spot market trading.
To do this the trader will look at the COT report. This report will tell you about the trades that have been done on this market. When you notice the trends and movements in this report you could translate them to market sentiment for the spot market. This is not always accurate and there is a delay in the data release so you have to consider this because you use the futures market.
The Commodity Market
The commodity market will impact certain currency pairs on the forex market more than others. However, there is no denying that there is a strong link between much of the forex market and the commodity market. When the prices of certain commodities change, there will be an impact on the forex market. The commodities prices that affect the forex market the most are the gold and oil prices.
The impact of the commodity prices changes will vary depending on the currency you are looking at and the market sentiment at the time. There are times when the impact will be very high and other times when the impact will be low. You also need to consider whether the currency you are looking at is a producer of the commodity or a buyer.