FOREX CURRENCY TRADING - FUNDAMENTAL ANALYSIS AND THE FOREX MARKET

Two types of analyses are used by forex currency traders for market movements forecasting: 'fundamental', and 'technical' (the chart study of past behavior of currency prices). 'Fundamental' focuses on theoretical models of exchange rate determination and on major economic factors and their likelihood of affecting foreign exchange rates.

A currency trader, who makes trades based upon fundamental analysis, will look at the supply and demand situation relevant to the particular currency being studied, and try to predict price movement by interpreting a wide variety of economic indicators and factors, government issued reports, news, etc.

Fundamental analysis focuses on economic, social and political factors as these drive supply and demand. Fundamental analysts look at various macroeconomic indicators such as economic growth rates, interest rates, inflation, unemployment etc. These factors impact upon currencies. A forex trader needs to be aware of announcements covering these important indicators as they may result in volatile trading especially if the announcement is an unexpected one.

Therefore, depending on which currency pair you are trading, you should keep abreast of the main economic reports for the countries your currencies belong to and be aware of when announcements are likely to be issued. For example, if you are trading the AUD/USD currency pair you should be aware and stay up-to-date with both the Australian and US economic reports, announcements and news.

Check out our Forex Trading Economic Calender which is a table of upcoming economic events that may influence currency cross-rates and ultimately your forex trading of these currency pairs. The table has the date time, currency/country and the indicator to be released. If you trade the USD in any currency pair, being one of the major world currencies with its high trading volume and liquidity, its economic reports, announcements and indicators listed below should be monitored as these reports affect the trading of any USD currency pair.

We also recommend ebooks that look at fundamental trading techniques which covers how the forex market moves with economic reports. See online-currency-forex-trading.com/forex-trading-e-books.html

IMPORTANT ECONMIC INDICATORS FOR THE US (Affecting any USD/X or X/USD currency pairs). 

Employment report (Non farm payroll)
Federal Reserve Interest Rate Announcement
Consumer price Index (CPI)
Gross Domestic Product (GDP)
International Trade / Current Account
Retail Sales
Consumer Confidence
Producers Price Index (PPI)

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