i want to understand something in this currency pair of a stuff is the base currency supply and demand the thing that gives value to a currency-pair we see on screen if it is so does it mean quote currency is just a price taker
A currency pair functions as a [B]ratio,[/B] comparing the [B]relative strengths[/B] of two currencies.
The value of the ratio (that is, the price of the pair) is determined by [B]both currencies[/B] (the base currency and the quote currency) [B]equally.[/B]
A currency pair can move [I]higher[/I] because:
• the base currency strengthens against world currencies generally, or
• the quote currency weakens against world currencies generally, or
• both currencies strengthen, but the base currency strengthens more than the quote currency, or
• both currencies weaken, but the quote currency weakens more than the base currency.
A currency pair can move [I]lower[/I] for any of the [I]opposite reasons[/I] (which you can work out for yourself).
.
Also, “supply and demand” isn’t really a helpful or meaningful concept, in the sphere of [I]currency[/I] trading: it’s far more accurate and appropriate to perceive the market in terms of “buying pressure and selling pressure”, partly [I]because[/I] it’s about relative strengths, as Clint mentions just above.
please sir what do you mean by rising above world currencies please shed more light on the rising above world currencies so i will understand. Thankyou
When Clint said “against world currencies generally” he meant that something specific to that currency has moved it across the board. For example, an unexpected rate hike by a central bank would very like strengthen that currency against all others.