On October 9th, there wasn’t any noise about industrial production in the Euro area.
So to prove a point that ‘noise’ in the media creates volatility, I decided to place a EUR straddle trade as follows: –
EURUSD – 1.1255 – 1.1285 – 1.1315
As it turned out industrial production numbers came out weaker but guess what, no one really cared.
The EURUSD hardly moved, so I withdrew the order.
The point I am making is that once we know where the economy if going then we need to follow the data that supports where the economy is going. Couple with noise in the media nearing the release of the relevant data, then, the currency will potentially be volatile when the data is out. Sounds reasonable? Of course.
The Panthenon Investment Group 