Key Concepts in Fundamental Analysis for Forex Traders

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.

Get The "Most Valuable"

Free Forex Training Series