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Fundamental Forex Analysis

Fundamental analysis is a study of the economic and political conditions of countries where currencies are traded on the foreign exchange market. The purpose of fundamentalist analysis is to assess the possible impact of political and economic events on currency price movements. As the commodity in the foreign exchange market is the currency, the “quality” of the commodity depends on the economic conditions of the country of origin. The quality of economic changes also depends on the price of the national currency in relation to foreign currencies.

Traders get information from different news outlets like Dow Jones, Reuters, Bloomberg and sites that are the best at foreign exchange factories on the Internet. They make real-time decisions about buying and selling currencies based on opinions. How favorable the news is for the monetary economy. Adjusting what is happening in the world is a very wise operating strategy, as we often witness changes in the foreign exchange market in response to important news or economic or political reports. In the “Strategy” section of the website, you will learn an exclusive method of trading during the “latest” news.

 

News is the movement of the market, it is the fundamental medium of any economy and affects all investors. While some people use fundamentalist analysis while others use technical analysis, everyone must understand the process and the consequences of disseminating news. Examples include labor market data, consumer confidence and inflation reports.

 

Using fundamental analysis of the foreign exchange market as the basis for the decision-making process, traders and investors can predict price movements by explaining various economic indicators, different types of news, government reports and, often, simple rumors. Sometimes, a given government report is much higher or lower than the consensus forecasts or the news spreads across the market. As a result, fluctuations in intraday prices become crazy. The objective is to capture these short-term price movements.

 

Depending on the currency pair you are trading in, it is important to know what the main economic report for the currency country is and when it will be issued. For example, if you are trading GBP / USD, you should pay attention to reports and economic news from the United Kingdom and the United States. If you use USD / JPY transactions, you should understand which important reports are issued by the United States and Japan. Only a few economies in the world affect the foreign exchange market. The currency in question must have a high volume of business, and the country in question must have an important position in the economic world. The following is a list of the most important economic indicators.

 

United States (affecting any USD / x or x / USD pair)

  • Non-farm payrol
  • Federal Open Market Committee interest rate change
  • Retail Sales
  • Consumer Confidence
  • ISM Manufacturing Index
  • Gross Domestic Production (GDP)
  • International Trade / Current Account
  • Philadelphia Fed Survey
  • Durable Goods
  • Beige Book

 

United Kingdom (affecting any GBP / x or x / GBP pair)

  • Gross Domestic Production (GDP)
  • Current Account
  • Bank of England Interest Rate Unemployment Change
  • CPI
  • Retail Sales
  • Industrial Production

Japan (affecting any JPY / x or x / JPY pair)

  • Gross Domestic Production (GDP) Current Account
  • Jobless Rate
  • Trade Balance
  • Tokyo CPI
  • LAW
  • Retail Trade

 

European Union (affecting any for EUR / x or x / EUR)

* Germany (Germany) is the largest member of the EU.

  • GDP
  • Current Account
  • Unemployment
  • DEM Unemployment (Germany) CPI
  • ZEW Economic Survey (Germany) IFO Economic Survey
  • Industrial Production
  • DEM Industrial Production (Germany) DEM Retail Sales (Germany)
  • Retail Trade
  •  

Similarly, these economic indicators have great potential for price fluctuations. When you start trading, you will see the impact of these reports on the market. After the economic report is released, prices sometimes go up 200 points in less than 15 minutes. There are many websites that can provide the exact date and time for each report. One of the best is the exchange factory. Under the influence of “very successful news” in the foreign exchange market, check the first two numbers (click to enlarge). Click on the link to enter the exchange factory.

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Mick

Mick

Mick is Editor in Chief and writer here on 361forex. I have been involved with the financial market for over 10 years as a self-taught professional trader and financial manager. Other features he loves to ride his bike on weekends, loves movies and going out with friends.

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