When it comes to trading currencies in the forex markets, there is no-one to fear more than a central bank and comments made by them. Right now, the Federal Reserve (FED) are in committee, determining whether to intervene in the US economy. If they do, they will decide how and when to do it.
In a market where trillions of dollars are traded daily, few institutions can affect the value of a currency as much as a central bank. An example earlier today is sterling (GBPUSD) as the minutes from the Bank of England meeting were released. The minutes had more impact on the currency than the actual decision.
GBPUSD hourly chart showing 80 pip move between 09:00 and 10:00
The minutes were released at 09:30 and the currency moved more than 80 pips, down at first and then back again. By 10:00 it was pretty much where it was an hour earlier. This kind of volatility is one of the reasons I am cautious when there is a major news announcement. Little impacts the market as much as central bank news.
Later today, the FED meeting concludes in the USA. Once details of that meeting are released to the market, there could be further volatility and currency re-alignment. We’ll know if there will be further stimulus in the US economy. Currencies are likely to trade sideways today until the announcement.
The nature of the Greek government and the rolling Euro crisis is on the sidelines, for today at least.