How do the banks affect the forex at news events?

Feb 22 at 18:38
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16 Replies
Member Since Dec 13, 2023   2 posts
Feb 22 at 18:38
Hi,
I have a question, may silly question for the majority. I have searched in internet, but couldn't find the answer.
When the news event occurs, the banks will put their orders to sell or buy. Suppose speaking about Eurusd pair. We suppose new news event occurred, which negatively affect the euro. The banks and big traders will sell the Euro. When they are selling, I suppose that there are buyers. When someone sells euro, there must be a buyer. So why does the euro then keep falling?
Can somebody clarify this point please?
Member Since Oct 28, 2009   1424 posts
Feb 23 at 10:43
It's generally considered that the banks do use news releases to move the market in the direction that suits their order book. Which is the general consensus on the market as a whole. The banks and big players go through a period of accumulation of positions and then a sell-off of these positions. It's far more complicated than this in reality, but always remember you are not the one in control of the markets.
11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
Member Since Feb 22, 2024   19 posts
Feb 28 at 02:47
While every sell order has a corresponding buy order, the direction of a currency's movement is determined by the overall balance of buying and selling pressure in the market, as well as by broader market sentiment and fundamental factors. So, even though buyers may step in, if there is overwhelming selling pressure, the currency can continue to depreciate.
Member Since Feb 02, 2024   23 posts
Feb 28 at 07:51
The forex market is primarily driven by general economic factors. There's always a buyer and seller for every trade. But let's say the news story scares more people than simply banks. Suddenly, there are more sellers of euros than buyers willing to hold them at the current price. This difference drives down prices until sellers get worried and stop selling, or until enough buyers are pulled in by the lower price.
Member Since Feb 07, 2024   7 posts
Feb 28 at 11:01
There is always a buyer and seller for every trade but the seller may have to reduce the price in order to find a buyer - hence the price falls. Likewise, if there is high demand for a currency the seller can choose to only sell at an increased price - hence price rises
Member Since Dec 13, 2023   2 posts
Mar 03 at 15:16
thanks for replies
Member Since Aug 10, 2021   178 posts
Mar 04 at 09:46
Banks play a pivotal role in influencing the Forex market during news events. When significant economic data or geopolitical events unfold, banks respond by adjusting their currency positions. Large financial institutions, armed with substantial resources and expertise, swiftly interpret the implications of news releases, shaping market sentiment. Banks' reactions trigger widespread buying or selling, causing currency values to fluctuate. Additionally, central banks may intervene to stabilize their national currencies or implement monetary policy changes, amplifying market impact. Traders keenly observe these bank-driven movements, seeking opportunities or hedging against potential risks. The interconnected relationship between banks and the Forex market intensifies during news events, shaping the global financial landscape.
Member Since Feb 22, 2024   4 posts
Mar 06 at 15:34
Simple. During news events, there is an imbalance between buyers and sellers, and traders worldwide might react at different times (as you know when the trading sessions overlap). This can prolong the selling pressure and keep the Euro's price falling.
Member Since May 08, 2023   37 posts
Mar 10 at 20:14
They have relative effect and control over the media and liquidity so, they are big players here.
Member Since Feb 12, 2016   47 posts
Mar 12 at 09:08
ialhamdazeez posted:
Hi,
I have a question, may silly question for the majority. I have searched in internet, but couldn't find the answer.
When the news event occurs, the banks will put their orders to sell or buy. Suppose speaking about Eurusd pair. We suppose new news event occurred, which negatively affect the euro. The banks and big traders will sell the Euro. When they are selling, I suppose that there are buyers. When someone sells euro, there must be a buyer. So why does the euro then keep falling?
Can somebody clarify this point please?
Banks play a significant role in the forex market during news events through their participation in currency trading and market-making activities. When important news is released, such as economic data or central bank announcements, banks often adjust their trading positions to capitalize on market movements. Additionally, banks may provide liquidity to the market by facilitating trades for their clients or acting as counterparties in transactions.
Member Since Feb 22, 2024   19 posts
Mar 12 at 19:35
In essence, while every selling transaction involves a buyer, the imbalance between the number of sellers and buyers, combined with market sentiment and speculation, ultimately drives the price downward. This is why even though there are buyers, the Euro can still keep falling in value against the US Dollar in response to negative news.
Member Since May 08, 2023   37 posts
Apr 03 at 23:25
It's not only about the news, it's about the liquidity available in the market too, they can have a serious effect on the market whenever they feel like it basically.
Member Since Dec 28, 2023   24 posts
Apr 04 at 14:25
I'm new to forex trading and have been following this fascinating discussion. There's one thing I'm still trying to wrap my head around. Given that for every seller, there's a buyer, how exactly do large orders from banks during these news events cause the currency to move significantly in one direction? Is it simply about the volume of what they're selling or buying, or is there more at play in terms of market psychology and the anticipation of other traders' reactions? Would love to hear your thoughts on this!
Member Since Oct 28, 2009   1424 posts
Apr 05 at 17:58
In the currency markets, market makers facilitate trading by providing liquidity. They do this by constantly offering to buy or sell currencies at publicly quoted prices. Market makers make money through the bid-ask spread—the difference between the buying and selling prices.

Supply and demand dynamics determine the prices at which market makers are willing to buy and sell currencies. When demand for a currency increases, its price rises; when demand decreases, its price falls. Similarly, when the supply of a currency increases, its price falls; when supply decreases, its price rises.

Market makers use the order book to manage their positions and adjust their prices accordingly. The order book contains a record of all buy and sell orders for a particular currency pair. Market makers monitor the order book to gauge supply and demand levels and adjust their prices to stay competitive.

Market makers can influence currency prices by adjusting their bid and ask prices in response to changes in supply and demand or to manage their own positions. For example, if a market maker accumulates a large position in a particular currency, they may adjust their prices to encourage more selling (if they want to reduce their position) or more buying (if they want to increase their position). Additionally, market makers may collaborate with other market participants to coordinate trading activity and influence prices.
11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
Member Since Apr 05, 2024   2 posts
Apr 05 at 18:40
Love it
Member Since Jan 15, 2024   23 posts
Apr 08 at 16:52
stevetrade posted:
In the currency markets, market makers facilitate trading by providing liquidity. They do this by constantly offering to buy or sell currencies at publicly quoted prices. Market makers make money through the bid-ask spread—the difference between the buying and selling prices.

Supply and demand dynamics determine the prices at which market makers are willing to buy and sell currencies. When demand for a currency increases, its price rises; when demand decreases, its price falls. Similarly, when the supply of a currency increases, its price falls; when supply decreases, its price rises.

Market makers use the order book to manage their positions and adjust their prices accordingly. The order book contains a record of all buy and sell orders for a particular currency pair. Market makers monitor the order book to gauge supply and demand levels and adjust their prices to stay competitive.

Market makers can influence currency prices by adjusting their bid and ask prices in response to changes in supply and demand or to manage their own positions. For example, if a market maker accumulates a large position in a particular currency, they may adjust their prices to encourage more selling (if they want to reduce their position) or more buying (if they want to increase their position). Additionally, market makers may collaborate with other market participants to coordinate trading activity and influence prices.
Thanks!
Member Since Mar 23, 2024   16 posts
Apr 10 at 03:28
Banks play a pivotal role in the forex market during news events by executing large trades on behalf of clients, institutions, or for their proprietary trading desks. Their substantial market presence influences liquidity and price movements. Banks often have access to exclusive information, enabling them to anticipate market reactions and position themselves accordingly. During news releases, banks may adjust their trading strategies, such as hedging or speculative trades, based on the incoming data's impact on currency pairs. Their actions can amplify volatility, leading to rapid price fluctuations as market participants react to their trades, shaping short-term market sentiment.
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