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How News Affect Forex

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  • 20 August, 2010 GMT

By: Adrian Friggieri

Anything around the world is affected by news, if something happens in the world than other areas will have repercussions. I once heard a person saying, if the US sneezes than the world will catch a cold. This is very similar to the affect I am talking about. Now Forex is not exception. The important news that relate and have an underlying relationship with money or investments (Also known as "Forex news") would make currency pairs oscillate and sometimes oscillate badly.

What are the main things however that reflect in big price moves:
1.   
Macroeconomics at large
2.   
Market Climate
3.   
Worldwide Geopolitics
4.   
Price and Money Actions

But how do Forex traders make money during news? Simple, they trade the Forex news! Honestly there will be no system more than trading the actual news expectation against the real result of the release. The market can swing violently in both directions or in any one direction. This will depend on the gap between the release expectation and the real figures published. This system is widely used also by financial institutions to bank in millions of dollars/Euros from Forex news trading.

Every week there are lists of news releases planned and all are able to be analyzed in advance and get prepared for the action when it is near. Forex news trading will range from GDP, Unemployment, Oil Reservives, Motor Vehicle sales, Inflation and Real Estate prices among loads of others. Including of course statements from the Federal Reserve or the Bank of England, which they are able to shake the market not only move it.

Apart from the US releases which are one of the most influential news traded releases there are also the UK, Germany and Asian releases which affect the markets directly. Canada and Australia would affect the CAD and AUD of course mostly but not with many possible pip movements.

I will discuss the setups and possible entry/exit points of Forex news trading in the future.

How Forex News Releases Affect Forex Trading

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