15/10/2022
Your technicals can become easier especially for those using strategies such as ict or wave theory if you learn the fundamentals aspects. Central banks are responsible for economic and monetary policies as well as the soundness of the financial system. These institutions set interest rates and control the money supply of a country.They have several monetary policies .As a trader you need to understand what fundamentals environment are we in for the long-term bias that guides you also in implementing your long-term order flow on your technicals.as of current market we are in an inflation environment and the major focus has always been the cpi and fed interest rates decision .USA inflation rate is 8.2% and for fed to reduce inflation they will need to raise interest rates. The impact of raising interest rates strengthens a nation currency. Another monetary policy fed use is called Quantitative easing. Quantitative easing (QE) occurs when a central bank buys long-term securities from its member banks. By buying up these securities, the central bank adds new money to the economy; as a result of the influx, interest rates fall, making it easier for people to borrow. There are impacts of QE is that it may cause inflation in the future because its new money also it weakens the the nation currency as the QE program begins. As a trader knowing when QE starts and ends is important. Some mentionable QE are after 2008 crash and 2020 covid crash the USA fed responded with starting QE and from the chart example on AUDUSD chart you can see hw the QE devalued usd dollar up to when they stopped. I repeat QE impacts can cause inflation on the long-term and i believe the the last 2 QE programs have really accelerated this inflation we have been having since 2008 crash ,mind you 2020 QE was announced to be an unlimited bond purchase (sic) till to when they announced ending march 9th 2022.i believe dollar has more room to gain as long as interest rates keep rising. We might as well wake up one day to a market crashing and the fed will be come to bail out this major bank institutions by doing another QE program but the regular guy will suffer resulting to the gap between the rich and the poorer widening. Below is a chart of AUDUSD you cant study just to see the implication of USA QE program
