Currency markets never decline in absolute terms – for one currency to go up, there will be others weakening against it. All currencies cannot go up at the same time. There is always going to be a loser.

Currency markets are important to a broad range of participants, from banks, brokers, hedge funds and investor traders who trade FX. Any company that operates or has customers overseas will need to trade currency. Central banks can also be active in currency markets, as they seek to keep the currency they are responsible for trading within a specific range.

What moves currency markets?

• Economic data
  This particularly affects critical areas of a country’s economy like inflation, unemployment numbers, foreign trade or payrolls.
• Central banks
  These can have a big influence over the performance of currencies, for example by changing interest rates or printing more money. Central banks can also buy and sell their own currency in order to keep it trading within a certain level.
• Political factors
  Increasingly, political uncertainty can drive currency markets. For example, the Swiss Franc has traditionally been seen as a safe haven currency. Something as banal as a speech by a finance minister can have a big impact on a currency.

Trading FX with City Index

• When trading with City Index, you are not buying or selling actual currency – rather you are speculating on the price movement between FX pairs.
• City Index offers prices on all the major currency pairs as well as many minor currencies.
• Spreads start from 0.5pts on some major currency pairs.
• You can trade FX with City Index through a CFD account or FX on MT4.