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Forex and Currency News

Forex and Currency News

09:27 09 November in Forex Trading

trading the news forex
trading the news forex

Volatile markets can be a trader’s best friend but also have the potential to reduce account equity significantly if left unmanaged. Therefore, in addition to placing guaranteed stops, traders can look to reduce their trade sizes to manage the emotions of trading. The table below summarizes the major US economic releases alongside some of the most important non-US data releases from around the world.

  • Forex news traders employ a number of different strategies for coping with and/or profiting from data releases.
  • In the wake of the implosion of SVB, traders are dialing down their expectations for Fed hawkishness next week…
  • This includes analysing its growth rate potential, as well as any potential legal, political or insolvency risks.
  • The trade balance is analyzed by traders in order to measure the strength of the country’s economy in relation to other countries.
  • With a consensus at 9.0%, it means that all the big market players are anticipating a weaker U.S. economy, and as a result, a weaker dollar.

Before any news announcement, even though you are planning to exit the market quickly, you must analyze the chart. Industrial Production report measures the physical output of the country’s factories, mines and gas and electric utilities. Retail sales is an index measuring the total sales of goods by all retail establishments in a country.

Gold Insights

By Fergal Smith TORONTO -The Canadian dollar weakened on Wednesday to a near five-month low against its U.S. counterpart, as the Bank of Canada paused its tightening… How to Trade with the Relative Strength Index The Relative Strength Index is a popular technical indicator used to identify over-bought or over-sold conditions. The offers that appear in this table are from partnerships from which Investopedia receives compensation. What you would see on your charts would be a huge dollar rally across the board because the big market players didn’t expect this to happen.

Trading the Forex Structure on the EUR/USD 14th March 2023 – FXStreet

Trading the Forex Structure on the EUR/USD 14th March 2023.

Posted: Tue, 14 Mar 2023 19:59:15 GMT [source]

If the data release was unfavorable and the market falls, a similar follow-up strategy could be taken. The trader could first take their profit on the long put as the market sells off. They could then subsequently trade out of the initially losing long call position if a corrective bounce occurs.

One of the great advantages of trading currencies is that the forex market is open 24 hours a day, five days a week (from Sunday, 5 p.m. until Friday, 4 p.m. ET). Since markets move because of news, economic data is often the most important catalyst for short-term movements. This is particularly true in the currency market, which responds not only to U.S. economic numbers, but also to news from around the world. Here, we look at which economic numbers are released when, which data is most relevant to forex traders, and how traders can act on this market-moving information. US economic data is so influential within global currency markets that it is generally seen as the most important news. It is important to note that not all news releases lead to increased volatility.

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The market players thought the unemployment rate would rise to 9.0% because of the consensus, but instead, the report showed that the rate actually decreased, showing strength for the dollar. They will go ahead and start selling off their dollars for other currencies before the actual number is released. So with this anticipation, big market players aren’t going to wait until the report is actually released to start acting on taking a position. When a news report is released, the number that is given is called the actual number. This is likely to be a reflection of the BoE’s stubborn refusal to raise interest rates in the UK as quickly as investors have come to expect it over the past year. The developments mean that the ECB is likely to reconsider its approach to the rate hike cycle in its policy decision on Thursday.

trading the news forex

Euro reversed off confluent resistance today and threatens a larger pullback within the broader uptrend. By Peter Nurse – The U.S. dollar climbed to three-month highs Wednesday after Federal Reserve Chair Jerome Powell guided towards a higher terminal rate than… BANGKOK – Thailand’s baht currency is likely to remain highly volatile due to external factors but its weakness is in line with moves in regional currencies, the central…

Why Trade the News on Forex?

Generally speaking, forex traders can look at economic news to assess its impact on interest rates and monetary policy​. News that suggests a more hawkish central bank tends to push forex pairs up in value relative to other currencies, while dovish news can cause a currency to depreciate. Many short-term traders base their decisions solely on technical analysis and price charts, regardless of which markets they are trading. It’s common for traders to completely ignore fundamental factors and instead follow price trends, analyse support and resistance levels and weigh up various signals from technical indicators. Most long-term investors will avoid chasing the news, only making decisions based on events very occasionally. But traders can find opportunities in the short-term volatility that follows an event.

However, the dollar’s upside momentum was so strong that the gains were quickly reversed, and an hour later, the EUR/USD had broken its previous low and actually hit a 1.5-year low against the dollar. Opportunities were plentiful for breakout traders but bullish momentum in the dollar was so strong that such a bad payrolls number failed to put a sustainable dent in the currency’s rally. One thing you should keep in mind is that, on the back of a good number, a strong move should also see a strong extension. You can be making the right move but the market may simply not have the momentum to sustain the move. Economic data tends to be one of the most important catalysts for short-term movements in the forex market. This would also happen if the actual report released an unemployment rate of 10.0%.

Those who have high blood pressure or other physical conditions that can be exacerbated by stress may want to consider using other strategies. Those who can trade currency options might instead enter into a long straddle or strangle strategy ahead of a news release. This strategy has a limited downside because it involves buying both a call and a put option, and it gives you more flexibility because you can split the strike prices based on your view. The relative valuation of currencies also means you’ll need to consider the overall economic picture of both countries involved in the currency pair you’re researching.

News & Analysis

You can also practise your news trading strategy in ademo accountbefore you graduate to live accounts. In general, major currency pairs will have lower spreads than the less traded emerging market currencies and minor currency pairs. Therefore, traders may look to trade the majors EUR/USD, USD/JPY, GBP/USD, AUD/USD and USD/CAD to mention a few.

In order to correctly understand the evolution of a currency, it is important to analyze all factors in the economy that can influence its exchange rate. This analysis is known in the world of brokers under the name of fundamental analysisbecause it is based on the economic fundamentals behind the mechanism of the exchange rate. A positive number that results in a brief rally followed by a bigger selloff in the currency pair could indicate other factors in the news report that are not readily apparent in the headline. This sort of behavior within the five-minute period can indicate a scenario to avoid because you may try to trade in a choppy market instead of with a new trend.

trading the news forex

A strong employment number generally boosts the currency’s valuation, while a weak number would cause the currency to lose value. Such observations allow them to rapidly determine whether any trend reversals or pattern breakouts occur once the news comes out. This then lets them respond appropriately and without delay to profit from the resulting rapid market move. Get expert reaction to latest market news and seize potential opportunities. By Peter Nurse – The U.S. dollar slipped lower in early European trade Tuesday ahead of a testimony by Federal Reserve Chair Jerome Powell before U.S.

When a significant and unexpected news item hits the market, technical indicators and/or chart patterns can also give false signals. This can cost technical traders plenty of money because they can see a signal only to be stopped out shortly afterward. Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable at fortrade, commodities are how we roll for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. LONDON – Demand for U.S. dollars in the currency derivative markets surged on Friday to its highest since mid-December, after a meltdown in U.S. banking stocks ignited a… Stay up-to-date on breaking forex news as well as relevant financial developments.

Which Major Forex News Releases to Trade?

In the 17 hours before the release, EUR/USD was confined within a tight 30-pip trading range. On the supply side, news that suggests a lower supply can push up prices, while news that suggests higher supply can depress prices, which can then impact related currencies. News that could reflect changes in supply may cover political tensions, wars, terrorism, weather, economic sanctions, labour relations and more.

If the prices of an exchange rate move slowly in a longer term, it is termed to have low volatility. As the market reactions to an important economic event are very fast and volatile, most traders find it useful to know the time of such upcoming events and adapt their trading strategies accordingly. When the market’s expectations deviate significantly from the data and the surprise is significant, the initial move in an exchange rate often continues for some time, as you can note in the USD/CAD chart above. While this continuation may not last, the possibility of profiting from the move still exists for the observant news trader. One way to forecast these employment numbers when news trading consists of examining the employment component of the Purchasing Managers Index reports that are released prior to official employment numbers. The PMI reports contain employment data from economic sectors such as construction, manufacturing and services.

Such traders depend on the forex market exhibiting the normal and orderly levels of supply and demand that make their technical trading decisions more effective. Certain major economic announcements can bring additional volatility in the markets, even if it is for just a short period of time. Traders should be aware that demand for many commodities – and therefore the commodity’s price – rises and falls with the seasons.

In the following lessons, we’ll give you some tips on how to safely trade the news. Often times the market may start off flying in one direction, only to be whipsawed back in the other direction. Slippage occurs when you wish to enter the market at a certain price, but due to the extreme volatility during these events, you actually get filled at a far DIFFERENT price. Your goal then, as a news trader, is to get on the correct side of the move. Traders need to be well prepared ahead of time – with a clear idea of what events they want to trade and when they occur. This is a conservative strategy and will help you take the trades only in the direction of the prevailing trend.

trading the news forex

It may be more opportune to wait to open new positions after news events have taken place, and then see if the reason for the trade is still valid. Economic announcements often involve these particular factors when advising traders of recent changes within the markets. This can have an impact on market sentiment​​, especially if the data announcement is not in line with what the traders had been expecting. Trading the news is a commonforexstrategy given the round-the-clock nature of the market. Unlike stock markets, the forex market is always open, so is often the go-to-market for out-of-hours announcements.

There are speculators who are specialized in trading when these indicators are announced. The fast, volatile price action combined with a bad broker that practice stop-loss hunting, spread widening and artificial slippages determined a large part of traders to abandon news trading. Because of the volatility and how capital-intensive trading a news release can be, the strategies described above will probably work best for seasoned and well-capitalized forex traders with nerves of steel.

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