Countries central banks of major currencies forex traders need to know because policies affect the exchange rate of the country's currency. If the policy of the central bank of a country to support the strengthening of its currency it will be many investors who are interested to buy the country's currency and vice versa. Central banks of major currencies most young are the property of the European Union countries, namely the European Central Bank (ECB), with members of the European Union countries that use the euro currency, or commonly known as the Eurozone (Euro Zone).
To determine the effect of the central bank in the forex market, we first need to know the main task of the central bank and the amount that is considered to be an important economic, second: meetingnya know the schedule in anticipation of our trading plan, and the third: to know what actions are usually performed so that the central bank can affect the exchange rate of the country.
Unique aspect of the Eurozone is that the member countries agreed to manage its monetary policy by establishing a central bank. The euro area currently consists of 18 countries where Latvia entered as a member since January 1, 2014 The following folder Euro area where not all countries within the European Union to be part of the ECB.
The ECB is a central bank that has the task of keeping the rate of inflation. Therefore when the data Consumer Price Index (CPI) as the region is not expected to occur in October 2013 as the market participants began selling the Euro with the assumption that the ECB will take action will result in the weakening of the Euro exchange rate.
Here Eurozone inflation data between 2006 and 2014 and expectations for 2015:
In 2006 the inflation rate ranged from 2.0% region. In a statement on the website says that the focus of the ECB is price stability the central bank, which is strongly influenced by the rate of inflation. ECB expected inflation target in the medium term is about 2.0%. If the regional inflation rate was much lower or much higher than the target rate, the ECB will act to take certain monetary policy. As happened in 2009 to 2011 when inflation rises, the ECB president Jean Claude Trichet's time to raise interest rates to make the exchange rate euro advanced.
However, the ECB should cut rates again when the debt crisis experienced by some of its members. The region's debt crisis began in late 2008 that hit Greece, Spain, Portugal, Ireland and Italy. Bond yields of these countries is very low to extend its debt back so that the ECB must step in to provide financial assistance (Bailout).
Rising interest rates make euro strengthened as shown in the chart of EUR / USD above, and when the pressure of the global economy where the currency exchange rate strong unfavorable trade (especially exports), the ECB lowered interest rates so that the EUR back down.
In addition, the ECB has also been raising the stock of its Euro currency as foreign exchange reserves of central banks of other countries as shown in the picture above chart which result in the increase in the exchange rate of EUR against USD. To keep the Euro currency is not too expensive, it seems this time the ECB makes the benchmark exchange rate EUR / USD up at 1.4000, and if the value exceeds the ECB will act to weaken the EUR in order to remain competitive.
That whay all of trader must get to Know The Europe Central Bank ECB Influence so trader will can get more antisipation on their strategy of trade
