Forex news is an important part of forex trading, forex market is traded with two kinds of analysis technical & fundamental. Trading with forex news, events, seminars and expo are normally considered as a fundamental aspect of trading. Forex news like political event, economic data release, central bank chief’s speech, economic & global leader conference, and various kinds of summits change the course of the market for a shorter period of time but sometimes movement can be for a longer period also particularly when an economic data like unemployment rate, payroll, GDP growth, and the trade balance is released.
Various kinds of global summits & seminars like G-8 & G-20 meetings, OPEC & OECD meetings, and bilateral top executive meet of different countries create volatility in the market. These meets are organized for discussing the global economic situation & relationship between two or more countries, if the outcomes of these meetings are hawkish and in favor of any country then the value of that country’s currency would appreciate and if it is dovish then value would depreciate against another currency. OPEC meeting that discusses the global supply of oil impacts the prices of oil, depends upon agreed supply limit.
Economic data release of any country, like changes in interest rate can appreciates or depreciates the currency against other countries currencies. If interest rate increases then the value of currency appreciates as more people would like to invest in that country’s currency, however if the interest rate decreases then value would depreciate against other currencies. GDP growth, unemployment rate, payroll and trade balance also affect the value of currency pairs. Positive figures better than expectations of economist’s can appreciate the currency however the opposite is true when released data are negative or below economist’s expectations.
These factors are normally fundamental aspect of economy and impact the market with a long term perspective, just after the release it creates huge volatility that lasts for a shorter period of time, trading in these times is really heartbreaking, sometimes you can’t gaze which way the market would go. This happens because of sentiments or thinking of large traders like hedge funds, large speculators and commercial banks on the market.
Central bank chief’s speech creates volatility in the market; it all depends upon how traders interpret the news, if they think that speech shows hawkish trend then the market would move in a positive territory for that country’s currency, dovish statement would depreciate the value of currency against other currencies. You should be very cautious if you would like to trade at these times.
Trading during or after the news event is not everybody’s cup of tea, it requires specialized skills to control emotion, stress, fear at the time of trading.