FUNDAMENTAL ANALYSIS

Fundamentals, indicators, analysis.

Post categories

 

Symbol Bid Ask Spread
EURUSD 1.19100 1.19124 2.4
GBPUSD 1.38299 1.38390 9.1
USDCAD 1.26518 1.26583 6.5
USDJPY 108.380 108.408 2.8
USDCHF 0.93071 0.93114 4.3
AUDUSD 0.76803 0.76833 3
NZDUSD 0.71605 0.71703 9.8
EURGBP 0.86087 0.86136 4.9
EURCHF 1.10857 1.10904 4.7
EURJPY 129.091 129.116 2.5
AUDJPY 83.250 83.282 3.2
GBPJPY 149.925 150.021 9.6
USDSGD 1.34210 1.34226 1.6
XAUUSD 1701.22 1701.49 27
XAGUSD 25.209 25.245 3.6

The above live prices are provided solely for informational purposes, not for trading purposes, and may be delayed.

Forex Fundamental Analysis

Forex fundamental analysis is the study of the overall economic, financial, political and other factors that represent and quantify the economy in question and can influence a financial instrument. These macroeconomic and economic health elements of a country help traders to determine future movements in a financial market.

Each day, many economic and political announcements are released that can have a direct impact on the markets, including the forex market. Therefore, it is important that traders understand how to interpret this information and convert it into an educated and successful trade.

You have to understand the reasons of why and how certain events like an increase in the unemployment rate affects a country’s economy and monetary policy which ultimately, affects the level of demand for its currency.

Using supply and demand as an indicator of where price could be headed is easy. The hard part is analyzing all of the factors that affect supply and demand.

 

Key Points

  • Deficits and Surpluses
    Countries with the most influential currency in the forex market are those with fewer deficits, meaning that they are in a good position to trade and even lend to other countries.
  • Economic Policies in Individual Countries
    Economic policies refer to how a country govern trades, budget and currency distribution. This is why budget readings in parliaments across the world are important to individuals looking to invest in the country’s currency. If the budget is well balanced, it promotes trade and improve the economic status, then the currency’s value should increase. If for any reason the distribution of wealth and economic policies reflected in the budget is less than satisfactory, the currency suffers.
  • Inflation
    Inflation reduces the value of a currency and the rate of inflation should be reasonable since it occurs in every country.
  • Trade Trends and Levels
    If a country is very active in trade, then there should be a great demand for its currency, which therefore affects all the currency pairs associated with it. A high amount of trade also indicates the competitiveness in the market, not just for currency, but for commodities and stocks as well. Economic events affecting trade trends involve supply and demand in global trade.

 

Once you have familiarised yourself with the information and concepts, you can open a Demo Trading Account to practice what you have learnt and build on your knowledge and understanding of how to trade successfully. Treat your demo account as you would your real account.