Posted by forex at 12:58 AM
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1. Find a FOREX news service. If you already have a FOREX broker, there is a good chance that your broker has some kind of news service available. If your broker does not offer news, search the Internet. The best places to find interest rate and FOREX news are financial websites covering global markets and currencies.
2. Mark down pending interest rate announcements on your calendar. Look ahead and note these events in advance so that you will be ready to trade the news when the time comes. As the interest rate announcement approaches, various commentators will speculate on the outcome. You may find this information useful as you plan your trading strategy.
3. Understand the relevance of interest rate news to specific currency pairs. For example, if you trade the EUR/USD, you should look for interest rate announcements from the European Central Bank and the Federal Reserve, as these announcements affect the Euro and United States dollar, respectively. Of course, any one announcement will have a variable impact across different markets. For example, an announcement regarding United States interest rates will affect multiple currency pairs including the EUR/USD, USD/GBP and the USD/JPY.
4. Interpret a higher than expected interest rate as bullish, and a lower than expected interest rate as bearish. As an interest rate announcement approaches, analysts will offer a projected interest rate. If the announced interest rate is higher than the projection, the currency will likely rally. If the rate is lower, the currency will likely decline. Markets often become very volatile after an announcement, so the best way to trade interest rate news is often to take a position in the FOREX market before an announcement based on your forecast.