On November 15, 2018, Dominic Raab announced his resignation as the United Kingdom's Brexit Secretary on Twitter, citing his disapproval over the government's position on the draft Brexit withdrawal agreement.
Coming hours after the resignation of the Junior Northern Ireland Minister Shailesh Vara, Raab's Tweet roiled currency markets, with the pound plunging more than 1 percent against the dollar.
The departure of Raab, who was seen as a crucial figure in attempts to sell the Brexit deal to sceptical lawmakers, underscored the sensitivity of global markets to political risk. However, it was also a timely reminder of how non-traditional information sources have become indispensable for traders making buy-sell decisions and setting strategies.
Competitive Advantage Is a Matter of Milliseconds, Not Minutes
A dependable flow of real-time, relevant information has always been critical for foreign exchange traders to glean insights for faster decision-making, profitable trading, and the creation of alpha under the right circumstances.
Mainstream media, central bank press releases and data dumps from official government agencies remain important sources of trade-sensitive information, but FX traders must now use a much wider lens given news can break anywhere at any time in the digital world.
Traditional sources capture only a filtered view of the data sets that proliferate on alternative channels—and are often a distant second in breaking the stories that matter.
Social media channels such as Twitter, Facebook, and LinkedIn, as well as under-the-radar corporate and individual blogs and a wide range of information sensors, have become a vital part of a borderless information landscape unfettered by editorial constraints.
Social media posts take only seconds to publish and can be shared by millions in minutes, often surfacing events that turn into published news minutes or even hours later. Time-pressed clients for whom competitive advantage is a matter of milliseconds rather than minutes in buy-sell decisions are likely to pounce on the information that reaches them faster. In the same vein, news from low-profile sources can act as trading signals and ensure traders have a critical head-start.
For example, on October 8, an unsourced report by South African website Business Day said the nation's foreign minister Nhlanhla Nene had handed in his resignation amid a corruption probe, triggering a rapid sell-off in the rand. Amid official denials from the President's office and before major news outlets could verify the story, the rand plunged more than 1 percent against the dollar. The rand would rapidly recover most of the losses the next day when Tito Mboweni was officially announced as Nene's replacement.
Trawling Deeper for Data That Matters
There are a number of bloggers who focus on the world's major central banks and monetary authorities, from the Bank of Japan to the U.S. Federal Reserve and even the People's Bank of China. Being alerted to news posted to these blogs - in real time - can add another layer of intelligence and act as an early warning signal on monetary policy, helping traders establish their positions and inform their strategies.
Increasing numbers of officials and public institutions are releasing data through social media as well as traditional channels, but traders cannot just rely on a broad social network of well-placed contacts to inform their decisions. News breaks at any time from all manner of different sources around the world.
For instance, information sensors and satellite images are generating a trove of publicly available, market-sensitive data. These non-traditional information sources can alert FX traders to impending extreme weather events and natural disasters that can impact major import and export supply disruptions, thus leading to currency moves.
Publicly available commercial shipping and flight data can also alert traders to supply chain anomalies, while also providing proxy signals for broader macroeconomic analysis.
Capturing Events as They Occur, Not After They Occur
Regardless of currency, time zone, or geographical location, traders need a 360-degree view to capture geopolitical events, FX announcements, and other breaking news as they occur, not after they occur.
Traditional sources are necessary but no longer sufficient for success in a digitally connected world. Real-time, structured access to alternative public information can help traders execute quicker and more effective trades, while building insights to maintain an edge in fast-moving markets.