There are two basic ways of the analysis of a situation in the market, it's Fundamental and Technical analysis. Fundamental analysis studies the underlying economic causes for price movements, while Technical analysis studies the price movements. To become a successful trader, you must always incorporate both types of analysis.
Fundamental analysis focuses on the underlying economic factors that move the Fx market. Traders who use this method tend to be long term traders. Fundamental analysis is purely focused on economic, geo-political and social events that drive supply and demand. Supply and demand play the biggest roles in reflecting the currency prices fluctuations.
The MOST Important Indicators
1. Unemployment (Non Farm Payrolls - NFP)
Unemployment measures the condition of the market of workplaces. One of the ways by which analysts measure the health of an economy is the quantity of the new workplaces created in non agricultural branches of economy for 1 month. The increase in this parameter characterizes increase in employment and leads to increase of a dollar exchange rate. On supervision, the increase in its value on 200 000 in a month is equated to increase in gross national product at 3.0 %. It is published, as a rule, on the first Friday of each month.
2. Decisions Under Interest Rates (FOMC)
The Federal Open Market Committee of Federal reserve system of the USA establishes interest rates during sessions. There are 8 sessions planned per year. Their date is known in advance.
3. Trade Balance
The Trade balance defines a difference between the imported and exported goods and services. When a trading surplus results, the national economy experiences proficiency, at lack - deficiency. The data on trade balance is published in the middle of the second month after the accounting period.
4. Consumer Price Index (CPI)
The given parameter reflects the price of the fixed quantity of the goods, therefore is the key indicator of inflation. Higher prices are considered as a negative result for the economy. However the Central Banks often answer inflation by an increase of interest rates, and currencies in turn react positively to messages on growth of the inflation.
CPI leaves monthly about 13-th of each month.
5. Retail Sales
The Index of retail sales measures the total of the goods sold in retail shops. It is used as a parameter for purchasing activity and defines influence on growth of economic activity. It is published monthly about 11th of each month.
Fundamental analysis focuses on the underlying economic factors that move the Fx market. Traders who use this method tend to be long term traders. Fundamental analysis is purely focused on economic, geo-political and social events that drive supply and demand. Supply and demand play the biggest roles in reflecting the currency prices fluctuations.
The MOST Important Indicators
1. Unemployment (Non Farm Payrolls - NFP)
Unemployment measures the condition of the market of workplaces. One of the ways by which analysts measure the health of an economy is the quantity of the new workplaces created in non agricultural branches of economy for 1 month. The increase in this parameter characterizes increase in employment and leads to increase of a dollar exchange rate. On supervision, the increase in its value on 200 000 in a month is equated to increase in gross national product at 3.0 %. It is published, as a rule, on the first Friday of each month.
2. Decisions Under Interest Rates (FOMC)
The Federal Open Market Committee of Federal reserve system of the USA establishes interest rates during sessions. There are 8 sessions planned per year. Their date is known in advance.
3. Trade Balance
The Trade balance defines a difference between the imported and exported goods and services. When a trading surplus results, the national economy experiences proficiency, at lack - deficiency. The data on trade balance is published in the middle of the second month after the accounting period.
4. Consumer Price Index (CPI)
The given parameter reflects the price of the fixed quantity of the goods, therefore is the key indicator of inflation. Higher prices are considered as a negative result for the economy. However the Central Banks often answer inflation by an increase of interest rates, and currencies in turn react positively to messages on growth of the inflation.
CPI leaves monthly about 13-th of each month.
5. Retail Sales
The Index of retail sales measures the total of the goods sold in retail shops. It is used as a parameter for purchasing activity and defines influence on growth of economic activity. It is published monthly about 11th of each month.