━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
🌊 GLOBAL LIQUIDITY — THE INVISIBLE FORCE BEHIND EVERY FX MOVE
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
💡 THE CORE IDEA
Currencies don’t transfer solely due to knowledge.
They transfer due to how a lot cash exists globally and how simply it flows.
When international liquidity expands, threat currencies rise.
When it contracts, all the things scrambles for security.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📊 WHAT IS GLOBAL LIQUIDITY?
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
World liquidity represents the whole sum of money out there within the international monetary system.
Predominant drivers:
-
Central financial institution steadiness sheets (Fed, ECB, BoJ, PBoC)
-
Cash provide progress (M2)
-
Credit score availability
-
Cross-border capital flows
Extra liquidity = extra risk-taking.
Much less liquidity = compelled deleveraging.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
⚠️ WHY GLOBAL LIQUIDITY MOVES FX
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
1️⃣ Danger Urge for food Management
Excessive liquidity → buyers chase yield → threat currencies strengthen (AUD, NZD, EM FX).
2️⃣ USD Dominance
World liquidity contraction normally means USD scarcity → USD strengthens aggressively.
3️⃣ Compelled Place Unwinds
When liquidity dries up, leveraged positions shut → violent FX strikes.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📉 LIQUIDITY CONTRACTION PHASE
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Attributable to:
Results:
-
USD strengthens
-
JPY & CHF strengthen
-
EM currencies collapse
-
Carry trades unwind
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📈 LIQUIDITY EXPANSION PHASE
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Attributable to:
-
Price cuts
-
QE
-
Fiscal stimulus
-
Credit score easing
Results:
-
USD weakens
-
Danger currencies rally
-
Commodities rise
-
Carry trades explode
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📊 REAL-WORLD EXAMPLES
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
🌍 2020–2021
🌍 2022
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
⚙️ PRO TIP — TRACK THESE INDICATORS
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
-
Fed + ECB + BoJ steadiness sheet traits
-
World M2 progress fee
-
Cross-currency foundation swaps
-
Stress in funding markets
-
Sudden USD power with out knowledge
These normally sign liquidity shifts earlier than FX traits explode.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
🚀 TAKEAWAY
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
FX is a liquidity market first — a fundamentals market second.
When liquidity flows, currencies pattern easily.
When liquidity breaks, currencies transfer violently.
When you perceive international liquidity,
you perceive why traits start, speed up, and finish.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📢 JOIN MY MQL5 CHANNEL FOR MORE FOREX FUNDAMENTALS AND REAL-WORLD TRADING INSIGHTS:
👉 https://www.mql5.com/en/channels/issam_kassas
