It is fair to say that the foreign exchange market is very news driven. For example, a central bank governor says something unexpected and there can be a significant impact on currency prices in a short period of time. Even something as simple as a different word used from the previous month, to describe market conditions can send a ripple through the markets.
When central banks change monetary policy and change the official cash rate, that countries’ currency may also move very quickly.
There are also numerous regular reports which provide an insight into how well an economy is performing or not. These can lead to assumptions on what central banks decide to do in order to stimulate an economy or keep in inflation in check, which then has a direct impact on currency prices.Read More