{"id":145559,"date":"2016-09-13T21:55:32","date_gmt":"2016-09-13T11:55:32","guid":{"rendered":"https:\/\/www.gomarketingteam.com\/auarticles\/how-currency-markets-react-to-the-news\/"},"modified":"2021-03-09T14:45:54","modified_gmt":"2021-03-09T03:45:54","slug":"how-currency-markets-react-to-the-news","status":"publish","type":"post","link":"https:\/\/www.gomarkets.com\/en\/articles\/forex-trading\/how-currency-markets-react-to-the-news\/","title":{"rendered":"How Currency Markets React To The News"},"content":{"rendered":"

Every day currency markets are being bought and sold by institutions and banks and large speculators based on economic news announcements that are released.\u00a0 But why do currencies react strongly to some news announcement and not to others?\u00a0 Let me explain.<\/p>\n

Financial institutions, banks and large speculators often have access to a Bloomberg or Reuters terminal which allows them to receive the latest economic data announcements instantly upon release. Meaning they will see the economic data before the average mum and dad investor ever gets to see it on a website and react. Mum and dad investors usually have to wait for a journalist to type the news up on a computer and then publish it online which can take minutes. Institutions, banks and large currency speculators pay thousands of dollars a month to gain access to the economic data from Bloomberg because they know they will likely be first to see it and they can instantly trade the Forex market and get in and out before the balance of the currency herd. Gaining access to the news instantly is one thing, knowing whether to buy or sell the news is another thing entirely.<\/p>\n

As a general rule banks, institutions and large speculators will place their forex trades based on their interpretation of what \u201cwas expected\u201d vs \u201cwhat really happened.\u201d Let me give you can example. Let’s say that at 11.30am the latest GDP growth numbers for Australia are due for release. Bloomberg, CNBC and other major financial news networks will have surveyed their favourite top economists and asked them for their consensus on what they think the GDP number will be. Bloomberg will come up with an average of all the economists and publish an \u201cexpected\u201d GDP number on its terminal. Let’s assume that number is 2.1% but when the data is released the number comes in at 1.8%. This would immediately be seen as \u201cout of line with expectation\u201d and this is when banks, institutions and large speculators often trade and can move the forex market very swiftly. If the news came out and the GDP number was 2.1% as \u201cexpected\u201d then it would be unlikely the same traders would bother trading the news event.<\/p>\n

Those same traders before an economic data number is released will also be looking at the history books and thinking back to what happened previously when the data was out of line with expectations last time for this news event and they will also have a very good idea about how their colleagues in other banks will likely trade if the data number is \u201cout of line with expectations.\u201d<\/p>\n

So in a nutshell, the forex market reacts to economic data releases or comments made by Central Bank officials if the news is \u201cin line\u201d or \u201cout of line\u201d with expectations.<\/p>\n\n\n\n
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\"Andrew<\/td>\n\n\n\n\n
Andrew Barnett\u00a0| \u00a0Director \/ Senior Currency Analyst<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
\n

Andrew Barnett is a\u00a0regular Sky News Money Channel Guest and one Australia\u2019s most awarded and respected financial experts, and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar.<\/p>\n

Connect with Andrew:<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0Email<\/a><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Every day currency markets are being bought and sold by institutions and banks and large speculators based on economic news announcements that are released.\u00a0 But why do currencies react strongly to some news announcement and not to others?\u00a0 Let me explain. 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Financial institutions, banks and large speculators often have access to a Bloomberg or Reuters ","link":"https:\/\/www.gomarkets.com\/en\/articles\/trading-strategies\/2-things-all-great-traders-have\/","type":"next","category":"trading-strategies"},"previous":{"id":145558,"slug":"why-you-need-to-re-train-your-brain-as-a-trader-as-a-forex-trader","title":"Why you need to re-train your brain as a Forex Trader","date":"2016-09-07 04:25:55","excerpt":"Every day currency markets are being bought and sold by institutions and banks and large speculators based on economic news announcements that are released.\u00a0 But why do currencies react strongly to some news announcement and not to others?\u00a0 Let me explain. Financial institutions, banks and large speculators often have access to a Bloomberg or Reuters ","link":"https:\/\/www.gomarkets.com\/en\/articles\/trading-strategies\/why-you-need-to-re-train-your-brain-as-a-trader-as-a-forex-trader\/","type":"previous","category":"trading-strategies"},"category":{"slug":"forex-trading"},"_links":{"self":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts\/145559","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/comments?post=145559"}],"version-history":[{"count":0,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts\/145559\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/media?parent=145559"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/categories?post=145559"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/tags?post=145559"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}