Page 84 - Ultimate Guide to Currency Trading

The Market Is Always Reacting

The market is always reacting to the news developments of the day. Because of the fact that the
markets are open twenty-four hours a day, nearly six days a week, there is always a chance that there
is some news that is developing somewhere in the world. This news also has a strong chance of
affecting the currencies of all the countries involved.

For example, it is possible that fresh news can come out of the Asian money centers such as
Tokyo or China when the European and U.S. markets have not yet opened. It might be a story about
China's growth figures being higher than expected. This news would affect not only the currency
markets of China and the commodity currencies, but also those of its main trading partners.

Additionally, good news from China also means good news for the developing economies of
Southeast Asia such the Malaysian ringgit, the Singapore dollar, and the Thai baht.

This is true because China is beginning to outsource some of its labor and light manufacturing
to these developing economies in Southeast Asia. Therefore, when capital flows from the United
States and Europe to China to pay for increased Chinese goods, some of this newly acquired capital
will be exported to the emerging markets that China uses to outsource labor. Because of the fact that
the growth of China is also related to its future consumption of commodity inputs such as steel,
copper, and the soft commodities such as cotton and wool, the commodities currencies would be
affected as well.

Some news is planned to be released after peak trading hours (5:00 P.M. to 7:00 P.M.
eastern time). This timing is to give currency traders time to digest the information
while the market cools off after a trading session. News releases are just one example

ALERT of how information can be published at any time of the trading day to control currency
traders' reactions.

News will also develop at scheduled times during the week and month as the central banks of
the world issue reports or otherwise have conferences that happen at prepublished times. Just about
every currency that is regularly traded has a website that is in English, and the site is updated by the
governing body of that currency. Whether it is the Riksbank of Sweden (www.riksbank.com), the
Reserve Bank of New Zealand (www.rbnx.govt.nz), or the Magyar Nemzeti Bank (the central bank of
Hungary, http://english .mnb.hu), these sites will publish the dates and times that rate adjustments,
economic numbers, and other guidance will be officially announced. If you are trading a particular
currency pair, whether the EUR/SEK, the USD/NZD, or the CHF/HUF it would best if you get to know
the websites of the central banks that manage the currencies that you are trading.