No matter how much much precedence you give technical analysis, there is no denying that macroeconomic events can have a powerful impact on international currency movements. Paying attention to forex news can protect you from making a trade that, while a sure thing from a technical standpoint, can be utterly undone by an economic announcement or a central bank intervention.
In fact, there is no shortage of forex traders who trade on fundamental analysis alone. Adopting this strategy does require the trader to undertake a high level of research into every scrap of news relevant to their chosen currency pair’s relative strength or weakness. Ideally, a blend of technical and fundamental analysis will ensure the best of both worlds.
Most of the forex news to watch out for is relatively obvious. Most trading facilities have an economic calender, a list of the types of announcements likely to have an impact on a currency’s relative value. Key forex news to follow includes central bank interest rate announcements, government trade reports, demand levels of government bonds, consumer price index announcements, and consumer spending levels.
Other events that will affect a currency are less obvious. For example, after the recent Tsunami in Japan, the Yen soared to near record highs. Despite a common belief that natural disasters have minimal effect on a country’s currency, the immediate costs of the disaster were such that the central bank of Japan was unable to intervene against the usual upward pressure on the Yen.
There are many sources of forex news, and the savvy trader will keep as many outlets within reach as possible. Diversification is key to getting a good idea of the macroeconomic events that may push a currency’s value for or against you. If the trader’s online forex trading facility has an internet radio feed, it is wise to keep it on. By being alert, the trader can avoid shorting a currency moments after the central bank has announced a massive intervention. Clearly then, it pays to keep up with the latest forex news.