Global Forex News

Forex (Foreign Exchange)


1. Fundamental Analysis

Economy Indicators

Fundamental analysis involve a lot of analysis on the macroeconomic situation.

Thus, economy indicators of the country such as GDP growth rates, unemployment rates, retail sales, and interest rate are used heavily in when valuating a country's currency. Some of the frequent used economy indicators in Forex trading are as below (Click in each for detail explanations):

• The Gross Domestic Product (GDP)
• Retail Sales
• Interest Rates
• Unemployment Rate

Besides those listed above, other fundamental factors used to analysis the currency strength include Industrial Production Reports, Consumer Price Index (CPI), Manufacturing PMI-ISM, and Manufacturing Production. We will cover each of these indicators from time to time.

How are indicators used in Forex fundamentals trading?

A country's economic situation refelects directly onto the currecny trading world. Hence, it is important for a Forex traders to keep an close eye on the financial clalender release by it country itself or private sectors. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation.

Also, it is recommended to study the fundamental aspects of several country whenever trading in the forex market. For those countries that have strong political/economical connection, currencies value flux hand-in-hand. Thus researching a few countru in a trade is necessary.

Some useful tips when implementing fundamentals analysis in Forex trading are:*

• Economic calendar: When and where. Currency values response sharply to certain release of economy indicators. Keep an close eyes on the currency price trend whenver there is a release on related economy indicators.
• Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most watched indicators.
• Know the market expectations for the data, and then pay attention to whether or not the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results and, if there is, be aware of the possible justifications for this difference.

*References from http://www.investopedia.com/articles/trading/04/031704.asp

2. From Fundamentals to Technicals in FX Market

Pure fundamental trading is very problematics. Without a doubt the analysis is very effective in predicting the overall economic condition and the market behavior.

It gives clear picture on general economy health of certain entity (a country in case of Forex) and shows how economy situation become what it is now as well as predicting the overall economic growth trend in the future.

However, information obtained thru fundamental studies often fails to signify short term fluctuation in Forex market. Thus, it is wise to apply precise techniques to convert fundamental study’s results into accurate entry/exit price indicators.

This will then bring us to the topic of Technical Analysis in Forex trading.

Economic Calendar

This Economic Calendar is developed and provided by FxFisherman.com, a huge forex trading community.