How Important is Forex News for Global Trading?
News plays an important part in our daily life as news provides us with the latest happenings around the globe, be it political changes or daily news. Therefore, for the same reason, the news in the Forex market is a vital information source for all of the Forex traders because the Forex news will keep the Forex traders up to date with the latest trend in Forex trading, the change of flow in the financial market, the change of direction for currencies and other vital information such as the latest forex exchange rate.
The role of forex news
Actually, the news released in the Forex market plays a vital role as any news released may cause fluctuation in the exchange rate of the Forex market. Unlike conventional news, the Forex news released in the Forex market is mostly related to the whole Forex market itself. Some examples of this news are a company's budget press release, a government press release of their budget, a nation's action taken towards their economy, and other relevant topics. Therefore, this simple news may trigger a chain reaction in the Forex market resulting in either a hike or a slump in the exchange rate.
Importance in Forex trading and stock exchange
For both Forex trading and stock exchange, the concept of news is almost identical with each other, where any news in both of these markets will result in a fluctuation towards the whole financial market. Take, for example, one of the most common types of news that may directly affect a nation's currency, political news.
For political news, sometimes, a change in the political events for a nation will result in a fluctuation of the nation's currency. Take, for example, the mighty US, when the election for the President is going on, the exchange rate of the dollar is very unstable, this is due to the reason where most of the investors are afraid of being affected by the political changes in the country and therefore, temporarily halt their investment or completely withdraw their investment.
This, of course, caused a fluctuation in the exchange rate when the news regarding the election was released. Another good example regarding the impact of Forex related news in the Forex market is a nation's change of plan in their budgeting.
As we all may know, sometimes when a nation is experiencing slow or stunning economic growth, the government will reduce the tax in that country, and maybe, they'll provide more jobs to the unemployed people by having more projects running (such as paving new roads, building new structures and others). If such action is taken, more and more money will flow into the market and, therefore, boost the growth of that country's currency as money is circulating more rapidly in that nation.
When such news is released or made known to the public, most of the investors will then be tempted to trade that currency as such action taken by the government will cause the currency to be more active and, as a result of that, gives more trading opportunities to the investors in Forex market.
Besides paying attention to the news in Forex, we must be more sensitive to other issues around the world, such as war, political disputes, and others. This is because anything that happens around the other side of the world, such as war, may affect other countries because waging war means a lot of resources will be directed to wage war and, therefore, causes inflation to the currencies.