Effect of covid-19 on forex trading

Effect of covid-19 on forex trading

May 27 • Forex News, Market Analysis • 751 Views • Comments Off on Effect of covid-19 on forex trading

  • Negative effects of covid-19 on forex trading (oil prices & Dollar)
  • Positive effects of covid on forex trading (new clients, trade volume)

When  covid-19, commonly known as the Coronavirus started in Wuhan China, nobody was sure about its impact on the global level. But now, in 2021 after one and a half years, we can feel its effect on almost every field of life. From Transportation to the Hotel industry, everything is stoped, which affects global economies and this effect will lead towards major shifts in the forex trading world. 

Pandemic in America and its effects on the dollar

After hitting China and Europe the pandemic rushed towards the US. At one point in 2020, the US was the epicenter of the novel coronavirus, hitting badly US economy leaving an effect on the dollar. This epicenter resulted in many major changes in the monetary policy of the US. Unemployment was at a peak during this hard time.

China and its trade with other countries

China is a big giant in international trade having trillions of trade volume in different countries including America, Australia, Canada, and Europe. When the pandemic Cross danger levels, the Chinese Government banned all Public transportation.  As a result, China reduces the oil demand. This decrease in demand from china hit hardly the International oil market and oil prices faced major shifts. These major shifts in oil prices also affect forex trading. In other words, china’s trade with other countries also got affected by this pandemic.

The other side of the coin

While we see the pandemic have negative effects on every business, we also receive some reports of boast in forex business. Many brokers in their reports, revealed that many new clients opened accounts with them and their former clients increased the volume of their account. They have observed significant increases in their clients and revenue.

What are the reasons?

There can be many reasons for this significant increase in forex clients on different trading platforms. For example, when people lost their jobs, they started looking for new income streams with their savings. Investors started taking interest in forex as they were unable to invest in many businesses because the government banned all major physical activities.

Investor’s interest

Many investors around the world took interest in post-pandemic time because other options were unavailable. So with fewer choices in the online world, they choose the forex world for the significant leverage it offers. Many well-established businesses suffered during this pandemic era, because of government sanctions. Several airlines, hotel chains, and tourism companies faced financial instability.

This poor condition of these traditional businesses drove investors’ attention towards this forex world. So even under this economic pressure, the forex world enjoyed a significant boost in its overall trade volume.

Before the pandemic, in 2016 the daily turnover of forex trading was 5.1 trillion $, while in 2019 with the pandemic it climbed up to 6.6 trillion $.

New-comers in forex

Millions of people around the world lost their jobs and were left vulnerable to survive. So people entered into the forex trading in search of a stable new income stream with their savings. So overall Pandemic has mixed effects on the forex trading world. In oil, it had some negative effects but overall it also has some positive effects on the market.

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