Best 6 Forex FUNDAMENTAL ANALYSIS

The most important and most complicated component of currency dealing is the ability to analyse tendencies of market changes and, respectively, forecast what factors and how will influence currency rates. Price behaviour includes both opportunities of quick gain of profit and possibilities of quick and considerable loss. That’s why correct forecasting of market movements, assessment of events, as well as the understanding of rumours and expectations, is a required component of broker’s or dealer’s work and is a guarantee of his successful activity. There are many factors that influence both, the whole currency market in general and some currencies, in particular.

There are two main analysis methods of the market situation: fundamental analysis and technical analysis. The first one assesses the situation from the point of view of political, economic, financial and credit policy. The second one is based on methods of graphic research and analysis based on mathematical principles.

Fundamental analysis implies the study of various messages about financial events in the world, about the activity in the political and economic life in both specific countries and in the world community, in general, that can influence the development of the foreign exchange market. Some analysis is done to understand what changes in the currency rates they can cause. Information about the functioning of stock exchanges and of big companies of the type of market-makers, the discount rates of the central banks, the economic and administration policies, the possible changes in the political life of the country, as well as various signs and expectations are found to be important here.

Fundamental factors are assessed from two positions, as a rule:

from the point of view of their influence on the official discount rate;

from the point of view of the condition of the national economy of the country.

Fundamental factors that influence the FOREX market.

Fundamental analysis distinguishes four groups of factors that influence the market directly:

economic;

political;

signs and expectations;

force majeure.

Classification of news according to the degree of their expectancy:

accidental and unexpected – usually some news of political and natural origin, more rare economic news (political instability in the country, wars, natural disasters, etc.);

planned and expected – usually news of economic character, more rare – political news.

The economic group of factors and their influence on the market are based on the axiom that any currency is a derivative of the economic development of the country and its cost may be regulated with the help of certain economic measures.