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PROFILE AND UNIQUE CHARACTERISTICS OF MAJOR CURRENCY PAIRS

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PROFILE AND UNIQUE CHARACTERISTICS  OF  MAJOR CURRENCY PAIRS It is important for all traders to have a good grasp of the general economic characteristics of each of the most commonly traded currencies in order to gauge what economic data and factors in general may have the most significant impact on a currency’s movements. Some currencies tend to track commodity prices, while others may move in complete contrast. Traders also need to be aware of the difference between expected and actual data. That is, the most important aspect of interpreting news and its impact on the foreign exchange markets is the determination of whether the market is expecting a piece of news. This is known as the “market discount mechanism.” The correlation between the currency markets and news is very important. News or data that are in line with expectations have less of an impact on currency movements than unexpected news or data. Therefore, short-term traders need to closely monitor expectations o