The Different Types of Interest
The existence of a Central Bank clearly indicates that the Capitalist System is still a modern version of the old Socialist or Centralized Systems, hence the term Central Bank.
The rates are fixed through the operations that the Central Banks perform in the credit markets. These operations are mainly due to particular interests of the US Financial System. In turn, this financial center replicates its actions in the rest of the world through the presence of the International Monetary Fund and the World Bank.
So is it possible to predict the next price movements in the market?
The movements in Monetary Policies that the Central Banks make by modifying the Rates are highly predictable using the correct reading of graphs and following the Keynesian Policy of Credit Expansion. Theory responsible for the unnecessary economic cycles, characterized by their times of prosperity and then by their times of crisis or depression.
Interest rates cause long-term changes in direction in the Foreign Exchange Market, which in turn affects most of the cases in the Bond, Futures and Stock Market. The rest of the changes are produced by external shocks such as wars, political elections and natural disasters.
An image reveals more than the words themselves.
Interest rates are the engine of the fundamental long-term oscillations of currencies.
The turns of the interest rate and NZDUSD currencies are extremely similar.
And especially if we can anticipate the next price trend.
The reason is simple. Moving trillions of dollars without altering the overall price can take weeks or even months...
It is also important to consider that privileged information, to which only certain entities or persons have access, influences the direction and movements that the price will make with great assertiveness.
In assets with a high interest rate that happens?
An important point to consider is the greed of power. The increases or decreases in the price are slow (depending on the asset) to maximize the interest generated by the difference in interest rates. But price movements against these assets are rapid 3 to 5 times faster than increases or decreases in the price, to avoid paying large amounts of interest. A clear example can be the NZDUSD.
Is it possible to generate money with the various fluctuations of interest rates?
In the fundamental analysis of a currency pair, we take into consideration interest rates (types) to position ourselves in the long term. In this way we take advantage of the appreciation of one of the currencies in the pair. But we also take advantage of the interest generated by the difference between both interest rates.
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