International News has a major role in moving the prices in the forex market. How so? It is because there are millions of investors that exchange international currencies in the forex market from around the globe. And since currencies are traded in pairs, and the pairs also have a correlation with each other, everything is connected, hence getting influenced by global news.
The prices of a currency change in relation to other currencies exchanged against it. There are many factors that impact the values of currencies, but mostly a currency’s value is related to the economic strength that country holds. The stronger the economy of a country will be, the more that country’s currency will be traded in the forex market and have power over other currencies in its value.
Similarly, the more economic power a country will have, their economic news, data, and events will impact not only their currency but also other currency that are frequently traded with it. This is how international news impacts the forex market.
Let us look at an example, the most traded pairs in the forex market have US dollars in them and are called major pairs. Being one of the strongest economies, the news and events happening in the United States along with their economic data releases will have a strong impact on the forex market rates of all those major pairs causing volatility and major price movements.
It is common for unexpected news to impact the market when investors are not prepared and just go with the flow. However, there is news such as data reports, releases, events, and speeches that are pre-scheduled and investors can take advantage of that. These are some examples of news that experts use to trade profitably:
- Central Bank policies
- Monetary policies
- Fiscal policies
- Inflation rates
- Interest rates
- Employment rates
- Trade balances
- Gross Domestic Product (GDP) figures
- Economic data
- Speeches or tweets by world leaders
In forex, the more you know in advance about a particular event that will impact one way or another on the currency rates, the better you can plan and strategize your trades accordingly to make the most out of that situation. It should also be noted that you need to monitor the news related to the currency pairs you trade, if you trade major pairs then monitor U.S. economic data and news along with the currency exchanged with the U.S. dollar, that country’s economic data, and news. If you trade with other pairs then those countries’ news is more important for you.
So it is important to keep an eye on these events that are related to fundamental analysis and if you use this along with technical analysis tools, then you can significantly improve your chances of making more profits.