How to Monitor Currency Rates when Markets Are Volatile

Currency exchange rates are constantly fluctuating moving with every new piece of information that becomes available to a foreign exchange trader. The exchange rate today that you can observe will not be the same rate foreign exchange rate that you see tomorrow. Changes in economic data points such as the U.S. employment report will have a profound effect on exchange rates and market volatility.

Economic Data Can Drive Market Volatility

Generally, on the first Friday of every month the U.S Labor Department releases its employment report. This report is closely watched by foreign currency traders throughout the globe. The international currency exchange market is very active prior and immediately after this data point is released, and it is important for traders to have a reliable source where they can find the best currency exchange rate. You are looking for a source that provides real-time currency rates that show a wide range of currency pairs.

The Most Liquid Currency Pairs are the Majors

Most traders are interested in the most liquid currency pair which are referred to as major currency rates, such as the EUR/USD, GBP/USD and the USD/JPY. All major foreign currency pairs have the dollar as either the base or counter currency. Since the dollar is part of all of the most liquid currency pairs traded throughout the globe, you can see why it is very important to pay attention to economic data points that effect the U.S. dollar.

Changes to the major currency pairs do not necessarily spill over into minor currency pairs, emerging market currencies or cross currency pairs. A minor currency pair is one that has the dollar as one of its currencies but is not a major. This type of currency pair is generally less liquid than a major currency pair. A cross currency pair, such as the EUR/GBP, can be very liquid but does not contain the U.S. dollar.

The key to successful trading is to have a reliable source where you can monitor currency exchange rates 24-hours a day. Understanding how currency rates move with every new piece of information will help you monitor currency rates, during times when volatility is present.