Fundamental analysis and its importance in Forex trading
Last Updated on January 31, 2021
Fundamental analysis plays an important role in knowing the market movement along with the technical analysis. The trader needs to follow the data issued by the economic indicators with focused attention.
Therefore, the trader must carefully follow this data, recognize the most important fundamental analysis data, and compare past and expected results.
Here are the most important fundamental analysis indicators
- Interest rate disclosure
The issuance of data on interest rates on currency is very important and works to change currency rates in the forex trading market, as well as the banks that determine the interest value on the currency.
Interest rates are of great importance in order to know the monetary policy and investment once a central bank announces a new interest rate.
- Consumer Index
The CPI is one of the most powerful ways to know the change in retail cost prices for the most-bought baskets. Therefore, these indicators are taken to know the inflation size occurring in the country.
Inflation is directly related to the gaining of currency strength within a country, and this matter affects its position within the international markets. If the economy was to grow under traditional conditions, then a higher shopper index would lead to a rise in base interest rates.
Employment sector indicators
Employment indicators reflect a country’s economic health or community health.
With this knowledge, you will likely know and notice economic activity. As for complicity with the speed of inflation, it is essential to understand the speed of changes and growth in employee wages.
- Balance of Payments
The balance of payments is the link between payments and the amounts received. In other words, this indicator shows the full addition of foreign trade operations, the trade gap, to achieve a balance between export, import and expenditures. If the amounts returned from alternative countries and international organizations are measured in excess of the external amounts, the balance of expenditures is positive. The surplus could be a positive problem for expanding the national currency.
- Government monetary policy
One of the goals that governments set is to achieve economic stability, such as reducing the state and dominant inflation and achieving a balance in spending. Governments try to do so by manipulating fiscal and monetary policies. Monetary policy relates to taxes and expenditures, while fiscal policy relates to monetary markets and also to the provision of credit, cash, and alternative monetary bonds.
Ways for Forex trading through the internet
The forex trading is known as the foreign exchange market and it is the largest…
What is the difference between trading and investing in Bitcoin?
Bitcoin is the first, largest, and most famous digital currency in the world. It launched…
The most important things to consider when choosing the right broker
If you have made the decision to trade in financial markets, the first thing that…
Bitcoin trading and important tips when trading in volatile markets
On December 17, 2017, Bitcoin reached its peak and was valued at about $20,000. All…
The most important factors affecting the stock markets
Stock markets are affected by many factors, whether economic or political, which forces investors to…
The most important factors affecting gold prices
Gold is one of the most popular commodities in the field of investment throughout the…