Although the majority of forex traders have turned away from fundamental analysis for technical analysis, this does not mean that fundamental analysis is a valuable tool in predicting currency movements in prices.
Fundamental analysis in Forex is the market analysis which involves the study of the economic situation of countries to trade currencies more effectively. It is possible to predict economic conditions, but prices unlikely that the market through fundamental analysis. Like any other market in the foreign currency market is affected by supply and demand are influenced by economic conditions.
In particular, the supply and demand are affected by the strength of the economy (reflected in its gross domestic product, foreign investment and trade balance) and also interest rates. The economy will be affected by the performance of investments. Expected yields may change due to the influence of inflation or deflation. It is therefore important to take the economic trends into account when planning investment strategies.
Looking at the political, economic policy, growth rates, inflation and economic developments in the value of currency traders in a country are able to predict the effect that current events have on the currency today. In particular, announcements related to the U.S. economy and politics are the key to monitoring. Pay attention to news revisions if the market situation can change quickly.
The business cycle
The activity of the overall economy shown by the business cycle. The cycle consists of four stages: the recovery is also known as peak of expansion, recession, and the channel. The growth of business, increased demand and production and employment growth can be seen. Interest rates generally increase during this phase due to borrowing money for businesses and consumers for their expansion. foreign exchange market are three types of indicators describing the movements of the economy during their entry into a certain phase of the cycle. The most commonly used by economists are leading, coincident and lagging indicators.
Inflation
At the time of the peak of the economic cycle the quantity of goods in demand is greater than the supply of one, which is followed by rising prices and inflation. In the inflationary environment, the amount of money offered for the products is very high and makes the conditions of rising prices. This reduces the client's ability to purchase. The reduction in demand reduced economic activity due to increased prices. The recession phase follows this process.
Gross National Product
Gross National Product is one of the main indicators of economic activity. There are four components included in the GNP. This is consumer spending, government spending, investment and net exports.
Monetary Policy
The control of money and credit supply in the economy is the overall objective of monetary policy. Interest rates are affected by these processes, which result in decreased economic activity. Monetary policy is primarily interested in controlling inflation.
Interest rates
The movements of the U.S. dollar in the currency market are usually a trend in the opposite direction from interest rates. For example, the increase in revenue caused by the upward trend in interest rates "decreases the rate of U.S. dollar accordingly.
Indicator of international trade
Another important set of indicators to foreign currency trader are indicators of international trade. When a country is showing a deficit in its trade balance this is usually seen as a sign unfavorable as the flow of money out to pay for foreign goods and services and can devalue the currency. For foreign exchange trader however fundamental analysis, and could show that the expectations of the market means that in some circumstances, a trade deficit is not all bad. For example, some countries often operate with a trade deficit and at least there is an abnormal increase in the deficit of the currency and will reflect this fact.
Fundamental analysis in Forex is the market analysis which involves the study of the economic situation of countries to trade currencies more effectively. It is possible to predict economic conditions, but prices unlikely that the market through fundamental analysis. Like any other market in the foreign currency market is affected by supply and demand are influenced by economic conditions.
In particular, the supply and demand are affected by the strength of the economy (reflected in its gross domestic product, foreign investment and trade balance) and also interest rates. The economy will be affected by the performance of investments. Expected yields may change due to the influence of inflation or deflation. It is therefore important to take the economic trends into account when planning investment strategies.
Looking at the political, economic policy, growth rates, inflation and economic developments in the value of currency traders in a country are able to predict the effect that current events have on the currency today. In particular, announcements related to the U.S. economy and politics are the key to monitoring. Pay attention to news revisions if the market situation can change quickly.
The business cycle
The activity of the overall economy shown by the business cycle. The cycle consists of four stages: the recovery is also known as peak of expansion, recession, and the channel. The growth of business, increased demand and production and employment growth can be seen. Interest rates generally increase during this phase due to borrowing money for businesses and consumers for their expansion. foreign exchange market are three types of indicators describing the movements of the economy during their entry into a certain phase of the cycle. The most commonly used by economists are leading, coincident and lagging indicators.
Inflation
At the time of the peak of the economic cycle the quantity of goods in demand is greater than the supply of one, which is followed by rising prices and inflation. In the inflationary environment, the amount of money offered for the products is very high and makes the conditions of rising prices. This reduces the client's ability to purchase. The reduction in demand reduced economic activity due to increased prices. The recession phase follows this process.
Gross National Product
Gross National Product is one of the main indicators of economic activity. There are four components included in the GNP. This is consumer spending, government spending, investment and net exports.
Monetary Policy
The control of money and credit supply in the economy is the overall objective of monetary policy. Interest rates are affected by these processes, which result in decreased economic activity. Monetary policy is primarily interested in controlling inflation.
Interest rates
The movements of the U.S. dollar in the currency market are usually a trend in the opposite direction from interest rates. For example, the increase in revenue caused by the upward trend in interest rates "decreases the rate of U.S. dollar accordingly.
Indicator of international trade
Another important set of indicators to foreign currency trader are indicators of international trade. When a country is showing a deficit in its trade balance this is usually seen as a sign unfavorable as the flow of money out to pay for foreign goods and services and can devalue the currency. For foreign exchange trader however fundamental analysis, and could show that the expectations of the market means that in some circumstances, a trade deficit is not all bad. For example, some countries often operate with a trade deficit and at least there is an abnormal increase in the deficit of the currency and will reflect this fact.
No comments:
Post a Comment