The Forex market is influenced by various types of economic news releases. The market not only responds to U.S. financial news but also responds to other significant news. The price movements mainly occur because of the news. Let’s learn which information is most important for traders and how to deal with it.
Currencies that are Most Familiar to the Traders
Eight significant currencies are most popular to the brokers and the investors. There is invariably a piece of financial data condemned to declare that Forex investors can use to make themselves informed trades. Actually, seven or more bits of information are declared nearly every working day from the eight significant, most-observed nations. For investors who choose to trade news, there are many opportunities. The eight major currencies are the mighty green buck (USD), the Euro (EUR), the Canadian dollar (CAD), the Australian dollar (AUD), the New Zealand dollar (NZD), the Swiss franc (CHF), the British pound (GBP), and the Japanese yen (JPY).
Many liquid currency pairs are obtained from these eight important financial instruments. They are EUR/USD, USD/JPY, AUD/USD, GBP/JPY, EUR/CHF, and CHF/JPY. Financial instruments that can be simply traded span the world. This means that investors can pick the currencies and financial declaration to which he or she pays specific attention. But, as a common rule, since the U.S. dollar is a component of 90% of all currency trades, U.S. financial announces tend to have the most noticeable impact on Forex.
The Time of the News Release
People use the financial calendar to learn the time of the important announcements. There are some specific times when investors are required to pay more attention to the Forex market. According to the Eastern Standard Time, for the U.S, the time is 8:30 a.m. to 10:00 am, for Japan, the time is 6:50 p.m. to 11:30 p.m. for the U.K., the period starts from 2:00 a.m. to 4:30 a.m., and so on. The pro option traders in Australia use the timing of news releases to take high quality trades. Being a full time trader, you have to rely on a premium broker like Saxo markets so that the volatility doesn’t have any impact on your trading.
The Key Releases
Some important announcements such as interest rate, inflation rate, unemployment rate, industrial production, trade balance, manufacturing surveys, and so on have a major impact on the value fluctuations. Such as when the unemployment rate increases, the price of the currency decreases. On the other hand, when the interest rate increases, the price also increases. Based on the present position of the economy, the respective significance of these releases may alter. So, sometimes, the unemployment rate might be more important in a specific month, than the inflation or interest rate decision.
The Ways of Trading with News
One possible way to grab a breakout in changeability without having to face the risk of a reversal is to trade foreign options. Foreign options usually have hurdle levels and will be profitable or unprofitable depending on whether the hurdle level has ruptured. The payout is predefined and the value of the option is dependent on the payout. These are the most famous types of foreign options to operate to trade news declaration such as double one-touch, one-touch, and double no-touch options. A double one-touch has two hurdles levels. Either one of the levels should be ruptured before termination for the option to become profitable and for the purchaser to obtain the payout. If neither hurdle level is ruptured before termination, the option is worthless.
A double one-touch is a good option to trade for news announcements because it is an unalloyed non-directional breakout play. As long as the hurdle level is ruptured, even if the value turns around later, the payout is assembled. A one-touch only has one hurdle level, which commonly makes it a bit less expensive than a double one-touch. The same characteristics hold true for it, such as the payout is only made when the hurdle level is ruptured before termination. It is a good option to purchase if the investor actually has an idea on whether the number will be stronger or weaker than the market’s concurrence speculation.