key concepts in fundamental analysis for forex traders
TRANSCRIPT
Key Concepts in Fundamental
Analysis for Forex Traders
WHAT IS FUNDAMENTAL ANALYSIS?
• The basic skill involved in fundamental analysis in forex trading requires an analyst to determine how a currency will react to macro-economic events, central bank monetary policy shifts, and political and social news from the currency’s nation of origin
FUNDAMENTAL ANALYSIS VS TECHNICAL ANALYSIS
• While the focus of fundamental analysis generally remains on news, sentiment and the release of economic indicators, technical analysis relies on the price and price movements of the underlying asset or the exchange rate of a forex currency pair.
FUNDAMENTAL ANALYSIS INDICATORS
• Employment Reports -
including the unemployment
rate, the number of claimants
or jobless individuals applying
for services, payroll levels, and
other job related data
FUNDAMENTAL ANALYSIS INDICATORS
• Trade Balance – the
difference between a
country’s imports and
exports which has a direct
effect on the demand for
that nation’s currency.
FUNDAMENTAL ANALYSIS INDICATORS
• Current Account – one of two
components of a nation’s
balance of payments, the
current account is the
balance of trade and net
cash transfers for a country
FUNDAMENTAL ANALYSIS INDICATORS
• GDP – changes in a nation’s
Gross Domestic Product
can have notable effects on
that country’s currency.
FUNDAMENTAL ANALYSIS INDICATORS
• CPI – the Consumer Price
Index shows the level of
prices of products on a
consumer level and is a key
inflation indicator.
FUNDAMENTAL ANALYSIS INDICATORS
• PPI – the Producer Price
Index gauges what
manufacturers are paying
for their material before
making a finished product.
FUNDAMENTAL ANALYSIS INDICATORS
• PMI – The Purchasing
Managers’ Index surveys
the activity of purchasing
managers and can be a
leading economic indicator.
FUNDAMENTAL ANALYSIS INDICATORS
• Commodity Prices –the price of commodities can have a significant effect on the currencies of both producing and consuming nations and are directly related to inflationary and disinflationary cycles.
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