Currency prices are fundamentally affected by supply and demand. Economic and Political factors may affect supply and demand as traders buy or sell currency pairs in reaction to news that was just released. Central bank intervention may affect the supply of a currency by releasing more money in the financial markets, or purchasing currency back, taking said currency out of the markets. A good example of this would be the GBP/USD plummeted after a referendum was passed for the UK to leave the European Union
However, sometimes currency prices change irrespective of Economic, Political and Central bank factors. During non-turbulent times, the currency pair may hit strong support / resistance levels in which buyers / sellers increase or decrease their exposure to the currency.
The spread is the differences between two prices. In this case, it’s the difference between the buy (bid) and the sell (ask) price. In forex exchange, the spread is likely to be the commission charged by the broker/ or the liquidity provider for providing filing the buy/sell order.
The spread in forex is measured in “pips”, which is the smallest unit of the price movement of the currency pair. One pip is equal to 0.0001. Therefore, a 2 pip spread between the EUR/USD would be 1.1050 / 1.052
Commodities (Specifically, “Hard” Commodities) are generally regarded as a input in the production or use for other goods or services. Generally, a commodity has the similar/same characteristics, regardless of the location it is harvested in. In this example, West Texas Intermediate (WTI) is a type of crude oil primarily traded on the New York Mercantile Exchange (NYMEX), although any oil produced which have the right characteristics can be considered as WTI.
Hard Commodities are not to be confused with Soft Commodities which share similar characteristics in being relatively homogenous such as rice, wheat, and cattle. The difference between hard and soft commodities consist of how its produced, with hard commodities such as oil and gold being non-renewable and soft commodities, mainly agricultural products, must be grown and cared for.
A forex pair (or foreign currency pair) is the quotation of two currencies relative to each other, listed on a foreign exchange currency. It is essential to ascertain which currency is associated with each currency code/currency pair. In this case, USD/JPY dictates how many Japanese yen can be bought with 1 USD. However, not all the products we offer are quoted like this. For example, Brent Crude Oil and West Texas Intermediate are quoted as “BRENT” and “WTI” Respectively.
You may find there are nicknames for specific foreign currencies/currency pairs. For example, the currency pair “GBY/USD” is nicknamed “The Cable” from when the exchange rate between the U.S Dollar and the British pound began to be transmitted across the Atlantic ocean but a submarine communications cable.
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