Understanding fundamental analysis and the impact of economic indicators.
Every trader wants to know where the price will go. However, in order to get the most realistic answer to this question, it is necessary not only to observe the chart on the trading platform but also to constantly monitor what is happening in the world. In this, fundamental analysis helps traders. A key referendum, the president’s commentary or a negative statistics publication can have a dramatic effect on the national currency rate. You may have heard phrases like: “The pound fell on the news ... The euro against the dollar jumped up due to the news ...”. Such statements are used by the experts in their daily fundamental market analysis and reviews..
Leading indicators Indicators of this type help to make a forecast about future country's economy changes. Any shifts in their values warn that we will soon see a similar negative (or positive) effect in other national sectors. So you can predict, for example, the impending recession, as Central Banks representatives usually do: they determine in advance the vector of development and adjust the monetary policy by raising or lowering rates. The same data is used by private traders to adjust their strategies.
Open the economic calendar at fxpro.com and find major economic indicators with two or three exclamation marks. These are publications of statistical data that have the strongest influence on the currencies of the related countries. Typically, traders pay attention to the difference between the actual value and the forecast. The more this difference the more volatility could occur on the price chart of a dependent asset. Most often, it is the national currency of that country the news is published.
Interest rate decision What is it?: Central banks regulate the rate at which they issue loans to the rest of the national commercial banks. It depends on the rate level how profitable it will be for foreign investors to invest in the national currency. When is the data published: each quarter by the eight major central banks (US Federal Reserve, European Central Bank, Bank of England, Japan, Switzerland, England, Australia and New Zealand).
