Economic and political factors affect currencies and its interests, inflation and political stability. The governments also join the influence on the FOREX market values for their own currencies by doing a move called the “Central Bank intervention.” They either flood the market with domestic currencies to create the feel of lowered prices or by buying other currencies in order to raise the price.
Anything could affect the volatility of the currency prices but the size and the volume of the FOREX market can make it possible for one entity to give the market an impulse for a certain period of time.
The media and the news is another factor which can make the currency prices rise or fall. The media like CNN can report political and economic unrest which may get interpreted in the FOREX on real time. Other new media which can have news which will directly influence the market prices are CNBC, Rob TV and Bloomberg TV.
The market hours also plays a leading role of factors which affect the FOREX. As this is a 24 hour market place, the trading can be done at any hours of the day and the hedgers and speculators could react on real time depending on the news which they receive.
Usually, the trading begins officially in Tokyo, Japan at 7:00 p.m. on a Sunday, New York time. Then at 9:00 p.m. EST, Singapore and Hong Kong will open. This is quickly followed by the European markets in Frankfurt, Germany at around 2:00 a.m. and in London at 3:00 a.m. at 4:00 a.m., the European markets are highly active and Asia will have concluded its day of trading.
By 8:00 a.m. on a Monday, the US market will open in New York while it is slowly going down and closing in Europe. Australia will join the market around 5:00 p.m. and at 7:00 p.m. again, Tokyo will wake up and reopen its market.