In this article we will discuss few important points of fundamental analysis.
We know that there are two approaches towards trading – fundamental and technical analysis. Fundamental analysis is based on macroeconomics events in the world-wide business, various reports such as interest rates, unemployment, CPI reports Bernanke’s and Draghi’s speeches and many more.
Global factors – have influence on whole market instruments – stocks, bonds, options etc.
Interest rates have strong influence on market pairs. Increasing of interest rates results in strengthening of home currency. For instance if FED increases interest rates, dollar appreciates. It’s very important to have a clue about current interest rate and its change.
Helpful link: http://www.fxstreet.com/fundamental/interest-rates-table/
23.02.2012
Inflation is one of the factors with strong influence. Increasing inflation is acceptable for stable economy but if inflation growth is faster, stronger than expected it has negative impact on economy. Result is weakening of currency.
Helpful links: http://www.bls.gov/cpi/ and http://www.ons.gov.uk/ons/publications/all-releases.html?definition=tcm:77-22462%3F
Inflation in USA
GDP – Gross Domestic Product – the most important indicator of economy state. GDP gives report about market value of all products and services produced within a country. If GDP declines economy is not so effective as previous year, meaning people don’t want to buy currency which economy weakens hence currency depreciate.
Helpful link: http://stats.oecd.org/
Fiscal and Monetary policy include some of the mentioned factors (monetary policy defines interest rates). These policies influence market behaviour every day. Slight change in taxes or FED governor speech might have huge impact. Trading these news is risky but if performed correctly, you can be a rich guy in a blink.
Forex trading most important reports: specific analysisEmployment report gives information about current unemployment in USA. Lower rate is considered to be dovish whereas higher rate is hawkish sign. Useful information for report tracking, benchmarks and other analysis can be found here. http://www.bls.gov/ces/
Retail sales provides information about food, beverages, clothing and other products sold during last month.
Helpful link: http://www.census.gov/retail/
CPI – Consumer Price Index report about changes in the prices paid by citizens for a basket of goods. Basket consists of daily consumption products such as food, clothing, medications, drugstore etc.
Helpful link: http://www.bls.gov/cpi/
Housing reports are very important and investors tend to make decisions upon them. There are more reports with strong influence on the market which can be found in this helpful link: http://www.census.gov/housing/
FOMC minutes report comes out three weeks after FOMC meeting. It has very strong impact on the market and every Forex trader should pay attention to them no matter what.
Helpful link: http://federalreserve.gov/monetarypolicy/fomc.htm, http://www.fxwords.com/m/minutes-of-fomc-meeting-united-states.html
Regarding reports, I strongly suggest to use economic event calendar. You can easily find any calendar in few minutes by googling. One of the widely used is http://www.forexfactory.com
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