The global foreign exchange market is driven by two simple components: demand and supply.。However, these basic principles apply not only to goods and services, but also to the general situation of a country.。One of the crucial aspects is the holidays, a time when the global foreign exchange market is freed from constant trading。

External factors play an important role in influencing foreign exchange trends。For example, the Russian-Ukrainian war pushed up fuel prices。Houthis randomly attack ships in the Red Sea, causing problems for major economies。

Red Sea Crisis and Foreign Exchange

The Red Sea is an important part of trade。However, random attacks on ships by Houthi militants, claiming to attack Jewish ships, have left major economies in jeopardy。Many companies have been forced to stop shipping, or diverted to the Cape of Good Hope。

That sounds reassuring until economies realise that the Red Sea crisis has finally made their journey longer and more expensive.。For reference, the itinerary for China-EU trade takes nearly 37 days。It now takes 49 days.。Since costs are calculated by distance traveled, the overall figure, including commodities and oil, will rise sharply。

Holidays and Forex Trends

Holidays are good on the calendar, but not in the Forex market。Holidays mark continued halt of forex trading。Thus, it affects the pace of foreign exchange investment。The main factors affecting the foreign exchange market are lack of liquidity and increased volatility.。

Forex markets are closed on December 25, December 26 and during the New Year。This period is considered an ideal time to revise the theory。For example, the dollar index has touched ~ 101.40 points; however, the euro is gaining traction。Being away from the market may allow traders to notice more such potential updates and thus review their portfolios for higher returns。

The relationship between gold and foreign exchange

The global gold market is priced in dollars, and losses in the foreign exchange market are ultimately losses in the global gold market。As of press time, the price of the asset is 2,032.30美元。Local currencies with higher exchange rate spending will have to shed more tears。

January may well mark gold's comeback。This is when the market opens during the holidays。Foreign exchange economic changes reflect better, many investors can profit from it。In the long run, gold is also a store of value.。

Currency changes and their impact on foreign exchange

Currency changes are related to changes in central bank monetary policy。For example, the U.S. Federal Reserve will start cutting interest rates in the middle of the year。The premise is that inflation is below 2%, or at least close to 2%.。

A rate cut will have a ripple effect as many countries are hesitating。Similarly, the Bank of Japan is expected to stop easing。The recent appreciation of the yen, changes in both currencies will affect areas with large dollar and / or yen trading volumes。

Commodity and foreign exchange market dynamics

The price of a commodity or commodity can have an impact on changes in foreign currency。This situation is understandable given that Russia has been sanctioned for its conflict with Ukraine。Countries are restricted from buying goods in dollars, causing prices to rise and putting pressure on countries that want to buy goods。

The low or restricted utility of the dollar puts it in the bag, paving the way for the storage of other currencies in bilateral trade。

Conclusion

All global events will eventually come together.。The Red Sea crisis will push up transport costs and then pass the burden on to the regions and their inhabitants。Similarly, holidays can affect liquidity in the foreign exchange market, forcing investors and traders to take a short break amid low trading volumes.。What is certain is that January will bring a lot of updates。