Many foreign currency traders regularly read through forex trading news reports, briefs, websites, and other resources in their quest to learn more about the factors that can affect the price of the currencies they’re trading f95zone.
Forex trading news often contains more than just information about the price of a currency you’re considering as a potential cross for your next trade. When you consider that each foreign currency represents the currency of an entire country, there are several factors that can affect the pricing of each country’s currency.
For example, there are some forex traders who don’t simply trade currencies for the potential profit they can gain on speculative trading. Large corporations use the forex market to secure adequate pricing for goods they intend to export. If the price rises or falls during the transit period of the goods, the corporation could stand to lose money. Forex trading news can help keep them up to date.
Another aspect of forex trading news that can help to determine whether currency prices are likely to rise or fall is to check the interest rate offered by the central bank of that country at any given time. Many governments will buy foreign currency to benefit from receiving interest during the investment period. If the cash rate of a country rises or falls, then this can often have a significant bearing on the currency price, which will usually rise or fall accordingly.
For regular forex traders, finding ways to access forex trading news can be a great opportunity to learn about any potentially profitable crosses you may not have considered in your trading strategy. A good example of this would be a trader who frequently trades across USD/GBP or EUR/USD and bypasses many of the other major currencies.
Assume that you read in the forex trading news that the Canadian cash rate had increased, which effectively raises their banking interest rates. This would see a small but noticeable increase in their currency price over the short term, so an astute trader would then begin the analysis required to calculate the potential profit of using the CAD as part of their next currency trade.
Of course, even though the news might bring information designed to give you at least an awareness of circumstances that may affect currency prices, it’s possible that some currencies may still move counter to what was indicated.
A good example of this was learning in the news that the Australian Reserve Bank had lowered the cash rate, which meant that interest rates were being reduced. Instead of the AUD falling in prices, as would have been indicated in some forex trading news posts, the value of the AUD rose sharply in response.