Conflict puts newswires on overdrive

Lee Miller, head of Bloomberg News Development, said Bloomberg readership for the first three weeks of March was at a record level, about double that from a year ago. "We’re seeing high readership of each update in war stories. Usually, readership of each update tails off significantly, but in recent times the declines have been less severe, as our users rely on us to provide the latest news".

Reuters responded to the increased need for its services last week by launching an Iraq conflict news package on the public internet, available in English, German, Spanish and French.

Pockets of liquidity and volatility are moving throughout the trading day as news from Iraq hits the wires, traders reported. In contrast, the usual influences on currency markets -- global economies, interest rate differentials, mergers and acquisitions, politics and global trade flows -- are being shunned.

"The market is being held hostage by news," said one London FX trader. "Every time a new report comes up on the wires, activity suddenly increases."

"Liquidity is very patchy," agreed Rob Hayward, senior FX strategist at ABN Amro in London. "When we do get some news we get liquidity."

TV coverage is also playing a part in the conflict, traders said. With more reporters and TV stations covering this war than any previous conflict, traders are able to get up-to-the-minute updates.

"A lot of people in the trading room are saying Sky is reporting this, CNN is reporting that, and scrambling around trying to verify things -- that has been a major influence in the past few days," said Hayward.

But the influence of TV coverage also brings its own set of problems, as reports are difficult to confirm and conflicting stories appear regularly.

"It’s all claim and counter-claim, and that can lead to confusion," said the London FX trader.

Banks subscribe to a number of various newswire services, and several are available over one vendor’s terminal. For example a trader may have a Reuters terminal with feeds from Dow Jones Newswires.