Every political decision, every smart or not-so-smart move a company makes, and every event on the other side of the globe can have a significant impact on the currency, commodity, stock, or crypto market, so you must closely monitor the intense dynamics in the world’s largest and most influential companies and countries.
For example, if the unemployment rate in the United States rises, this could indicate that the dollar will fall in value against other major currencies.
Sometimes bad news means good news
It’s possible that bad news for certain stocks will turn out to be good news for others. For example, if a hurricane has caused damage someplace, utility stocks may fall in anticipation of costly emergency response and repairs. Insurance stocks would eventually fall in value, depending on how bad the storm was. Home improvement retailer stocks, on the other hand, will rise in expectation of stronger sales in the coming months.
Large natural disasters may cause major shifts in the stock market, but as the example above shows, this does not necessarily guarantee that all markets will fall. In online trading, you must be prepared to profit in any direction.
Essentially, you are bombarded with information from news, television, and social media. All you have to do now is learn how to filter and reap the benefits.
Financial and macroeconomic data influence worldwide financial markets, which are interrelated. As a result, the Forex market is no exception. Currency rates – the fundamental instruments of the foreign exchange market — are influenced by major financial news, key statistical reports, and significant geopolitical events. But nothing beats witnessing the news’s actual impact on the Forex market. Let’s take a deeper look at a couple more examples.
How do Monetary Actions affect Forex?
The monetary policy decisions made by large central banks have an immediate impact on currency pairs. The currency pairs can move dramatically up or down depending on how the interest rate is altered (too fast or too slow), or if an unexpected comment about future interest rate changes is made.
How do Macroeconomic Releases affect Forex?
This is yet another key type of Forex news that has a significant and abrupt impact on currency values. The US quarterly GDP data releases are probably the most essential report to keep an eye on. If the released quarterly change information differs significantly from the predicted value or the previous quarter’s figures, the currency market reacts promptly.
Geopolitical developments are another important factor that influences the Forex markets. Keep an eye out for the lesson on politics later this week, where we’ll go through them in greater detail.
If you want to find out how the coronavirus pandemic influenced the financial market, you can check out our article about it here.
Follow the Big company moves
Apple, Amazon, Tesla, Facebook, and a slew of other major corporations constantly have something fascinating to say or reveal. You must always be aware of and anticipate prospective changes in stock values, whether it is a new product they are launching or a new corporate policy.
The stock price will alter when product information becomes publicly available, rather than just going up or down in response to a new product launch or announcement. As a result, if you know that a company is expected to release a next-generation product shortly, the stock price of that company has already reacted to that information.
As a result, if you believe the product will exceed market expectations when the information is released, you can consider making an investment at the time of the release. However, if you believe the product will fall short of market expectations, you should consider shorting the position.
To sum up
As you can see, current events have a significant impact on the market, therefore it’s critical to keep track of any relevant news and make informed trading decisions.