How can commodities react to economic news?

How can commodities react

The FX, Commodities and other financial markets are extremely interesting to those who understand the meaning of the world global economy, its effect on world population and global world economies.

It does not matter if you are a long term trader or an intraday trader, economic news affect our trading anyhow. This is why it is so important to understand the economic reaction to such news.

When looking at the world market besides stocks before an economic news update you can easily see the tick of the market, if for example using a metatrader platform, going up and down very rapidly. This effect means that there will be a volatility and it usually starts several minutes if not seconds before the economic news.

Currencies, bonds, stocks and commodities have this effect prior to the news update. In fact, most traders love commodities trading and therefore this article will guide you on how the market reacts on commodities with different news updates.

Here is an example of commodities and their reaction:
-Petrole, US Oil or Crude light has the effect of extreme volatility. A wise man once said, if you can predict the weather locally or global weather forecasts, you can become a millionaire. This in fact is true. Take for example the Tsunami that hit India; the market is closed at the moment but on the opening the commodities’s reaction will be correlated to what has happened.

Same reaction can occur on the price of gold when there would be an uncertain reaction with an economic news update such as the Non-Farm Payrolls in the US.

If you open any commodities’ graph, you can see that Commodities: Gold, Silver and US Crude light all look similar in terms of the direction of the price on these products when important news occur. Same reaction or similar reaction occurs on metals and gas prices also act similarly.

Prior to any economic news reactions, traders must be firm and certain on the direction they will trade.

Some traders even have the best methods of all, place pending orders on economic news because the market can go down before storming up or vice versa.

Please remember to notice such economic news and how you trade the commodities during those news because the reaction can be profitable or a catastrophic one.

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