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Daily forex fundamental analysis

Daily forex fundamental analysisTo receive new articles instantly Subscribe to updates. EURUSD Fundamental Analysis – August 24th 2018. Here is the key factor to keep in mind today for Euro trades: German GDP: The Final German GDP for the second-quarter increased by 0.5% quarterly and by 2.3% annualized. Economists predicted an increase of 0.5% quarterly and of 2.3% annualized. Forex traders can compare this to the previous second-quarter German GDP report which increased by 0.5% quarterly and by 2.3% annualized. Exports increased by 0.7% and Imports increased by 1.7%. Economists predicted an increase of 1.1% and of 1.5%. Forex traders can compare this to first-quarter. EURJPY Fundamental Analysis – August 23rd 2018. Here are the key factors to keep in mind today for Euro trades: French Manufacturing PMI, Services PMI and Composite PMI: The Preliminary French Markit Manufacturing PMI for August is predicted at 53.5. Forex traders can compare this to the French Markit Manufacturing PMI for for July which was reported at 53.3. The Preliminary French Markit Services PMI for August is predicted at 55.1. Forex traders can compare this to the French Markit Services PMI for for July which was reported at 54.9. The Preliminary French Markit Composite PMI for. AUDUSD Fundamental Analysis – August 22nd 2018. Here are the key factors to keep in mind today for Australian Dollar trades: Australian Westpac Leading Index: The Australian Westpac Leading Index for July increased by 0.10% monthly. Economists predicted an increase of 0.1% monthly. Forex traders can compare this to the Australian Westpac Leading Index for June which increased by 0.13%. Australian Skilled Vacancies: Australian Skilled Vacancies for July increased by 0.2% monthly. Forex traders can compare this to Australian Skilled Vacancies for June which decreased by 1.0% monthly. GBPJPY Fundamental Analysis – August 21st 2018. Here are the key factors to keep in mind today for British Pound trades: UK Public Sector Net Borrowing: UK Public Sector Net Borrowing for July was reported at -?2.9B and UK Public Sector Net Borrowing excluding Banking Groups at -?2.0B. Economists predicted a figure of -?2.2B and of -?1.1B. Forex traders can compare this to UK Public Sector Net Borrowing for June which was reported at ?3.3B and to UK Public Sector Net Borrowing excluding Banking Groups which was reported at ?4.2B. UK Public Finances for July were reported at -?19.2B and. EURCHF Fundamental Analysis – August 20th 2018. Here are the key factors to keep in mind today for Euro trades: German PPI: The German PPI for July increased by 0.2% monthly and by 3.0% annualized. Economists predicted an increase of 0.2% monthly and of 3.0% annualized.

Forex traders can compare this to the German PPI for June which increased by 0.3% monthly and by 3.0% annualized. Eurozone Construction Output: Eurozone Construction Output for June increased by 0.2% monthly and by 2.6% annualized. Forex traders can compare this to Eurozone Construction Output for May which increased by. What is fundamental analysis? Forex fundamental analysis is based on an assessment of important international economic reports. Traders examine these figures and comparing them, make conclusions, which are then used in their trading strategies. Fundamental analyst should always be aware of all the most important economic news (national and international), giving them a proper assessment in order to make profitable and fundamental trading. What are main parts of forex fundamental analysis? Economic indicators are an important part of the financial information for assets. On the Forex market the assets are the currencies of various countries. For any country, there are a number of important economic indicators.

The main parts, which every trader should consider while making a fundamental analysis are: base rate of a national currency; employment rate; unemployment rate; GDP level; consumer price index, inflation rate; country’s trade balance figures. While some fundamental news have very valuable information for the forex fundamental analysis, others are less important and have virtually no effect on the changes in the foreign exchange market. For example, if a country is experiencing strong economic growth and low level of inflation, this information can significantly influence the exchange rate of this country’s currency. How to do fundamental analysis? Fundamental analysis studies the primary underlying things that affect the economy of your particular enterprise, like a stock or forex currency. It attempts to be able to predict cost action and also trends by simply analyzing economical indicators, government policy, societal as well as other factors within a business never-ending cycle framework. If you're more dedicated to think of the markets like they are a big clock, fundamental analyses would be the gears and also springs that move the hands round the face. Anyone can explain what time it really is now, but the fundamentalist knows about the intrinsic workings that move the clock's palms towards occasions (or prices) sometime soon. Fundamental analysis is incredibly effective in forecasting economical conditions, although not necessarily exact market costs. Studying GDP forecasts or perhaps employment releases can provide you with a fairly clear picture of an economy's health and the forces at the office behind the data.

But anyone still needs a strategy to translate that into unique trade accessibility and depart points. The fill between fundamental data plus a specific dealing strategy usually comes from a forex trader model. These models utilize current and also historical empirical facts to estimation future costs and change those straight into specific positions. The fundamental analysis includes all that makes a country and its currency tick. From interest levels and core bank insurance policy to healthy disasters, the basic principles are a dynamic mix of distinct plans, erratic actions and unforeseen events. That said, not just about every development may move a country's foreign exchange. Try to begin by identifying the most influential contributors to this particular mix vs. following just about every fundamental in existence. A Step-by-step Guide to Fundamental Analysis of the Currency Market. In this brief guide we will try to provide you with a step-by-step plan for analyzing the global economic environment and deciding on which currency to buy or sell. Introductory Comments. Fundamental Analysis and Technical Analysis (FA and TA) go hand-in-hand in guiding the forex trader to potential opportunities under ever changing market conditions. Both beginner and veteran traders can benefit from the material that follows, but veterans have learned to make one important distinction.

They do not spend an inordinate amount of time on the FA side of the equation, primarily because they do not have the resources, access to key information, or the ability to read and assimilate the mountains of data that are made public on a daily basis. Large banks, hedge funds, and institutional investors have those resources, but even they have a difficult time arriving at correct predictions on how market forces will evolve. The advice is simply to use FA to determine a general feel for market directions, the interplay of key variables, and existing monetary policy differences to suggest which currency pairs offer the greatest opportunities at a point in time. The objective of every trader is to assess market conditions daily, and then to modify his strategy accordingly. FA and TA are your tools for achieving this goal each and every trading day. 1st Step: Study the macroeconomic arena. To build our wealth, we must create an analytical structure. To create the structure, we must first establish its basis. The basis of our analysis will involve the study of macroeconomics at the global scale. We must establish the background at the highest level to be able to filter the data and reach at the dynamics of currency pairs at the lowest level. In doing so, we will examine cyclical dynamics, the monetary policies of major central banks and a few other indicators. Past behavior of monetary institutions has great relevance to their future choices , which is why we must keep historical data in mind while analyzing the future direction of the markets. The first phase is relatively straightforward, since during a boom volatility falls, and liquidity becomes abundant on a global scale; during a bust the opposite happens. Nonetheless, it’s very important that the trader know how to isolate the noise from the data, otherwise he will be a victim of political or media spin, and his analysis will fail. Decide on the phase of the cycle.

We must first determine the phase of the economic cycle on a global scale. By examining global default rates, international reserve accumulation and bank loan surveys of major economic powers it is possible to notice the changing phase of the global economic cycle, even though these are second-tier indicators, and are a bit late in signaling the phase of the cycle. But they are still safe, because market actors often refuse to acknowledge the importance of these data until they are confirmed by falling industrial production and rising unemployment — developments that come quite late in the phase of the cycle. Examine technological innovations, political environment, emerging market fundamentals. Upon deciding the phase of the cycle, we will try to determine the dynamics that can enhance productivity and create a period of non-inflationary economic expansion on a global scale. When emerging economies adopt the new technologies of the developed world, and create a new basis of industrial production, productivity will increase, and will sustain growth without creating inflation. Similarly, when new technologies like air travel, mass production, or the Internet are implemented for the first time, productivity will increase, and wealth and demand will be generated, leading to a period of non-inflationary growth everything else being constant. The details of this subject can be studied further in our section on fundamental analysis. The global political environment also has a great influence on international currency fluctuations for obvious reasons. The high inflation era of the 1970s, for instance, was caused by a number of political events influencing economic fundamentals. Similarly, hyperinflation in Germany in the aftermath of the first World War was also caused by political developments that perverted the natural course of economic events. Conclude the first Step: Productivity gains will ensure a growing global environment (a boom phase) until the technological innovations are fully absorbed; but they are greatly prone to creating bubbles. If the cycle is going through the bust phase, all speculative activity must be curbed. Carry trades and aggressive emerging market plays must be reduced, leverage must come down and long-term positions must be established as currency pairs reach bottom.

If the cycle is going through the boom phase, it is time to build our risk portfolio and manage our risk allocations through correlation studies and money management methods. Once we decide on this aspect of our trades, we can move to the second step, and have a closer look at the monetary environment. 2nd Step: Study global monetary environment. In the second step, we move from the generalized studies of the first step to a more specific discussion of the developed world economies. In the first step we examined the factors that influence the economic state of all nations. Now we will take a closer look at the monetary policy, and attempt to determine the length and depth of the current phase of the cycle. Study the interest rate policies of major global powers. In light of their past behavior we will examine the policy biases of major central banks, such as the Bank of Japan, the Federal Reserve, and the ECB. Our study will take into account the policy biases and legal mandates of these institutions, along with their independence. By studying and clarifying their policy biases, we can have an idea on money supply growth, which will help us decide such variables as emerging market growth potentials, stock market volatility, and the interest rate expectations in a local market, which can translate into critical rate differentials when compared to other countries. Compare money supply expansion and credit standards with the previous period. Once we understand the policies of global central banks, we must compare these policies with their precursors, and decide on their possible impact on the global economy. Easy money coming out of a recession is normal, and if credit channels are functioning, it should alert us to increase the risk tolerance of our portfolio . Conversely, tight monetary policy, following a period of economic boom, would mean that the global economy will go through a period of reorganization, which would lead us to reduce the risk tolerance of our portfolio . A continued period of lax monetary policy (low rates) would imply that the forex market will develop risk bubbles, that is, currencies of nations with weak fundamentals will appreciate way beyond their equilibrium value, which is a contrarian trade opportunity for shorting them .

A continued period of tight monetary policy by a majority of the developed world’s central banks will force speculators to reduce leverage, and hence reduce the impact on the currency markets. So, as currencies of nations with strong fundamentals appreciate way beyond their equilibrium value, we will have another contrarian trade opportunity for shorting their currencies . Exploding bubbles, commodity shocks and major political events can create exceptions to the above scenario. Analyze the VIX, developed market loan default rates of corporate and private sectors. We are aware of the phase of the cycle, but we must also find a way for determining the volatility tolerance of our portfolio. Stock market volatility and the loan default statistics of corporations have an important role in determining forex market volatility, as low risk perception in the economy at large allows all actors to increase leverage and liquidity, which leads to a generally safer environment for forex traders. Of course, like everything else in the markets, low or high volatility are temporary phenomena. The trader must not only analyze present volatility but also its causes, the actors that help reduce it, and the factors that can neutralize their impact on the markets. Knowledge of these will allow us to react quickly to market shocks, and help us reduce our losses when they inevitably occur eventually. Conclude the second step: This step will allow us to understand where in the cycle we are. Toward the peak of the boom phase, VIX, default rates and interest rates will all be quite low, allowing us maximal profit from the risky positions we had assumed (for example by longing the AUD, while shorting the yen.) Conversely, towards the peak of the bust phase, all those value will register extremes; and by expressing a negative view of risk in our portfolio, we will be able to protect our capital; and while pocketing good profits as other financial actors reach the same conclusions with us. 3rd Step. Finally, in the third step we will decide on the actual currencies we will buy or sell, and on how long we’ll maintain our positions. We will simplify the process here, but the most important indicators that must be studied are: Examine the interest rate differentials of nations.

In light of unemployment statistics, capital expenditure and output gap, since most of the time markets attach the greatest importance to interest rate differentials between currencies, we must form an opinion on the direction of central bank interest rates. This can be done by studying unemployment statistics and the output gap. As capacity constraints in an economy increase and unemployment falls, labor market shortages create wage pressures which are eventually translated into higher prices and inflation in an economy. To combat this development, the central bank will raise rates, and will keep it high until there are visible signs of cooling in the economy, as demonstrated by rising unemployment and fewer capacity constraints. Similarly, by following these values the trader can form an opinion on where the interest rates will go. Compare the balance of payments of the currencies. The balance of payments of a nation is like the balance sheet of a company. The healthier the balance of payments, the stronger the nation’s currency will be in times of economic turmoil. We will study the balance sheets of nations in terms of current and capital account situation. Is the nation’s external position maintained by bank deposits and asset sales (which can be revised easily), or by long term developments such as foreign direct investment or reserve accumulation? We discussed these matters in previous texts, and the reader can examine them for a better understanding of balance of payments dynamics. Trade the third step: During the growth phase of the cycle, economic actors favor risk, thus currencies with stronger fundamentals are prone to be sold in favor of those who choose to attract capital through higher interest rates. Thus, during the boom phase or at the beginning of it, we will sell currencies with strong fundamentals offering low interest rates, and buy the currencies offering high interest rates to compensate for weaker fundamentals. During the bust phase, we will buy currencies offering low interest rates with a strong balance of payments, and sell currencies that offer high interest rates but are built on a weak balance of payments situation. Thus, we will choose currency pairs which offer the greatest imbalances to the trader, and will either enter long-term counter trend positions with low leverage, or we will await the market to confirm our analysis with its actions.

Concluding Remarks. Fundamental Analysis can be very complex and time consuming. It is truly an academic exercise, but a general understanding of its principles in a given situation will help point you to where you may have your greatest potential for gain. 2014 gave us two prime examples of how this process can work to your benefit. First, the UK economy seemed to be recovering more quickly than the U. S. at the start. The belief was that austerity measures were working, and the consensus was that the U. K would raise interest rates ahead of other nations. As the frontrunner from an FA perspective, the Pound soon appreciated markedly versus its rivals. When economic data failed to support these expectations, the Pound fell like a rock. Secondly, the U. S. economy now seemed primed to be the first to raise interest rates. Europe, however, suffered from low growth, low inflation, recessionary tendencies, and a potential quantitative easing necessity. The Euro, as a result, also fell like a rock. In both cases, a general knowledge of Fundamental Analysis would have guided the trader to currency pairs that offered the highest potential for gain. Your goal is to understand how the market is changing, and fundamental information drives those changes.

Spend your time wisely, however, in order to reserve as much time as you can for trading. Further reading: Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you. How Fundamentals Move Prices in the FX Market. by James Stanley , Currency Strategist. Price action and Macro. Your Forecast Is Headed to Your Inbox. But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk. Your demo is preloaded with ?10,000 virtual funds , which you can use to trade over 10,000 live global markets.

We'll email you login details shortly. You are subscribed to James Stanley. You can manage you subscriptions by following the link in the footer of each email you will receive. An error occurred submitting your form. Please try again later. Fundamental Analysis in the Currency markets centers around Macroeconomic data Macroeconomic analysis can be simplified by focusing on interest rates (and expectations) Traders can incorporate Price Action to make analysis even more simplistic. Fundamental Analysis in the stock market involves analyzing the inputs of a company in an effort to forecast future growth potential. For an individual company, this can be a very logical way to look for investment ideas. Fundamental Analysis of a company would involve investigating that company’s financial statements, to notice changes from one year to the next; or perhaps looking that the management of that company, and their track record in order to determine how successful they might be towards accomplishing their goals. In the Forex market, many of those statistics don’t exist, and we’re trading entire economies against one another. In each of these economies, thousands of companies exist trying to maximize their profit potential, so the analysis of a single company’s management structure or market share doesn’t really mean a whole lot. Due to the nature of the market, many traders refer to technical analysis, and we showed you how fundamental data events can be traded with technical analysis in the article The Potent Combination of Fundamentals and Price Action. In this article, we’re going to go in-depth behind how fundamentals impact prices in the FX market. Why Currency Values Matter. Currency prices matter because of cross-border trade. We investigated this concept in-depth in The Nucleus of the FX Market .

In the article, we saw how the nation of Japan was absolutely ravaged by a strong yen; as a stronger yen meant lower profits and margins for Japanese exporters. The concept of Fundamental Analysis in the Forex Market can be all boiled down to one simple data point: Interest Rates. If interest rates move higher, investors have a greater incentive to invest their capital; and if interest rates move lower, that incentive is lessened. This relationship is at the heart and soul of macroeconomics; and this is what allows Central Bankers to have tools to steward their respective economies. The decision to increase or decrease rates can bring impact to other economies as well. Let’s say, for instance, that you are an American with cash to invest. After having little incentive and extremely low rates for a long time, you notice that The United Kingdom increases rates 25 basis points. This increase in interest rates from the Bank of England can and should bring higher rates in other issues from The United Kingdom; so you may not necessarily buy Gilts or a government bond, but investors can now look to invest in England to get that higher rate of return. Additional investors thinking the same thing rush into UK bonds, and eventually – the price of the British Pound will go up to reflect this additional demand. Now it becomes slightly more difficult for the UK to export goods (similar to the problem Japan faced in The Nucleus of the FX Market ). A great example of this was in Australia from 2002 leading up to the Financial Collapse; as insatiable demand from China drove growth throughout Australia, unemployment got very low and inflation moved very high. The Reserve Bank of Australia (RBA) moved to increase interest rates, and currency prices followed. The Aussie more than doubled while RBA moved rates from 4.25% to 6.75% Created with MarketscopeTrading Station II. This is an interest rate cycle, and it drives capital flows that are at the heart of the FX market. How Interest Rate Cycles Drive Economies. It all goes back to the incentive to invest.

If Central Bankers want to slow down their economy, they look to raise rates. If they want to encourage more growth within an economy, they look to decrease rates. Higher or lower rates bring a two-pronged impact on the economy. The first and most obvious impact is the incentive to invest. If rates increase, that incentive to invest also increases; and if rates decrease, so does the incentive to lock up one’s money. The second impact is what this does for capital expenditures. If rates decrease, the attractiveness of locking up a long-term loan at the new lower rate is much higher than it was previously. The incentive to buy big-ticket items like homes, and cars is now higher. And when you buy a home or a car, the homebuilder or car maker has to turn around to pay for their materials and workers. If the lower rates increase the number of homes or cars that are being purchased, this amounts to growth.

Homebuilders and car makers will eventually have to hire new workers to keep up with the demand; and as demand for workers increases, so will the wages that are needed to attract qualified candidates. This is how lower interest rates can bring higher employment and inflation (often shown as CPI or ‘Consumer Price Index’); and it’s at this point that Central Bankers are going to investigate increasing rates in an effort to prevent the economy from over-heating. If interest rates stay low, the effects of ‘over-heating’ could be immense. Prices can continue inflating, and if left unchecked – could bring hyperinflation. Imagine going to the store to buy a gallon of milk and seeing the price at 27 dollars. I don’t know about you, but I’d freak out at seeing something like this. Then my mind would wander to other areas where costs might be increasing. If a gallon of milk is 27 dollars, then how much will that new car cost me? How much is milk going to cost tomorrow? So, Central Banks want a moderate rate of inflation.

This helps to keep growth within an economy; people get pay increases, more people are working and paying taxes, and consumers have the confidence that they can save their money for tomorrow because prices won’t increase a hundred-fold overnight. What do Central Bankers Watch? Both Central Bankers and Forex Traders watch macroeconomic data prints with the goal of getting something out of them; but their objectives are slightly different. FX Traders are often interested in the price reaction of a data print. If CPI comes out higher than expected, then traders may be looking for long positions to move higher. FX Traders can price in new data quickly, creating volatile price movements. Created with MarketscopeTrading Station II. Central Bankers, however, take a much more broad view on such statistics. Central Bankers want to watch the primary points of reference for an economy in an effort to make the correct decision as to where to move rates. Inflation and employment are chief amongst these statistics, as these are two of the primary pressure points within an economy. If unemployment is high, the economy will likely struggle. As employmentunemployment prints are released out of an economy, this new information is factored in fairly quickly. FX Traders will begin pricing this in with the probability of an eventual rate hike or cut by Central Bankers to factor this information in. Same for inflation: As inflation (CPI) data prints are released in an economy, traders will act quickly to incorporate this new information in to prices. Meanwhile, Central Bankers are watching cautiously to decide if they want to do anything at their next meeting. Increasing unemployment (decreasing employment) along with decreasing inflation are threats to an economy that will usually see Central Bankers investigate rate cuts. Decreasing unemployment (increasing employment), and increasing inflation are signs of a growing economy, and this is when Central bankers will look at potential rate hikes.

But, Central Bankers and Forex traders alike are not happy to just sit around and wait for employment or inflation numbers to show changes within an economy. This has brought to light numerous additional data prints that traders and investors will look to in an effort to anticipate changes to inflation, unemployment and interest rates. Consumer statistics are extremely important in large economies like The United States, or Europe in which consumer activity has a heightened level of importance for the global economy. In the article, The Lifeblood of the US Economy , we looked at the major data releases that include this information. The Euro can get extremely volatile around releases of Consumer Sentiment Numbers, and this is because consumer activity in established economies is often looked at as a precursor to inflation, employment, and growth. GDP, or Gross Domestic Product, is a direct expression of growth (or contraction) within an economy, and this can also be a huge precursor to price movements; especially if the announced rate of growth is far away from expectations. But, in and of itself, increases or decreases in GDP don’t bring more jobs or higher inflation, so this is often looked at as more of a ‘lagging’ fundamental indicator. Production numbers can be especially important in growing economies that are at a very industrialized stage of the growth process. China is a phenomenal example; as each months ‘PMI’ (Purchasing Managers Index), will draw massive interest from numerous parties around the globe. PMI is a survey that’s recorded from producers gauging their sentiment on future orders. The thought behind this statistic is that if producers are seeing growth, then that growth will eventually cycle through to consumers; after all, if someone wants to buy a good, it has to be produced in the first place, right? Forex Fundamental Analysis.

Our Forex fundamental analysis is written by experienced economists who can clearly extrapolate market lessons from daily news events. Eliminate the need to analyze the news independently by reading daily fundamental analysis from DailyForex. We’ve done the hard work for you, so that you can spend more time in the trading room and less time in the news room. Forex Fundamental Analysis. Lots of voices have accused China of manipulating the Yuan for commercial advantage over a number of years. July is usually a good month for the balance of UK government finances since many self-employed people submit the second of their self-assed tax payments to the Treasury that month. The nation of Greece will be able to finance itself through international money markets again, having completed the EUIMF bailout process. Last week was a largely negative affair for the world’s major stock markets with only the Dow Jones making any ground. The official rate of inflation in the UK has edged up for the first time since November 2017. The economy of Japan is the third largest in the world behind those or the USA and China, respectively.

A New York Federal Reserve report released on Tuesday showed that American’s borrowing hit $13.29 trillion in the second quarter of 2018. The US economy managed to produce 209000 jobs in July. The level is well above the number needed to provide employment for new entrants into the US job market when retirements and morbidity is factored in. Last week was a largely negative affair for the world’s major stock markets with only the Nasdaq and FTSE markets making any ground. The world had a taste of how the markets would react to the UK leaving the EU immediately after the referendum on 23616 – Sterling fell heavily against all other major currencies. Currently, as a full member of the EU, the UK enjoys the best possible trading relationship with the EU. A UK interest rate hike has been on the cards for quite some time, but the Monetary Policy Committee of the Bank of England always found a compelling reason to defer it. Last week was a largely negative affair for the world’s major stock markets with only the US markets making any ground. We live in a global economy. A clear example of this is the fact that 80% of cars manufactured in the UK are for the export market and contain components sourced from across Europe. The description that Oscar Wilde came up with to describe fox hunting could also just about be used to describe the current mess that the UK government finds itself with its hard core Brexiters. Free Forex Trading Courses. Want to get in-depth lessons and instructional videos from Forex trading experts? Register for free at FX Academy, the first online interactive trading academy that offers courses on Technical Analysis, Trading Basics, Risk Management and more prepared exclusively by professional Forex traders. Most Visited Forex Broker Reviews. Risk Disclaimer: DailyForex will not be held liable for any loss or damage resulting from reliance on the information contained within this website including market news, analysis, trading signals and Forex broker reviews. The data contained in this website is not necessarily real-time nor accurate, and analyses are the opinions of the author and do not represent the recommendations of DailyForex or its employees. Currency trading on margin involves high risk, and is not suitable for all investors.

As a leveraged product losses are able to exceed initial deposits and capital is at risk. Before deciding to trade Forex or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite. We work hard to offer you valuable information about all of the brokers that we review. In order to provide you with this free service we receive advertising fees from brokers, including some of those listed within our rankings and on this page. While we do our utmost to ensure that all our data is up-to-date, we encourage you to verify our information with the broker directly. Risk Disclaimer: DailyForex will not be held liable for any loss or damage resulting from reliance on the information contained within this website including market news, analysis, trading signals and Forex broker reviews. The data contained in this website is not necessarily real-time nor accurate, and analyses are the opinions of the author and do not represent the recommendations of DailyForex or its employees. Currency trading on margin involves high risk, and is not suitable for all investors. As a leveraged product losses are able to exceed initial deposits and capital is at risk. Before deciding to trade Forex or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite. We work hard to offer you valuable information about all of the brokers that we review. In order to provide you with this free service we receive advertising fees from brokers, including some of those listed within our rankings and on this page.

While we do our utmost to ensure that all our data is up-to-date, we encourage you to verify our information with the broker directly. Forex Fundamental Analysis. The following are the most recent pieces of Forex fundamental analysis from around the world. The Forex fundamental analysis below covers the various currencies on the market and the most recent events, announcements, and global developments that affect the Forex market. Forex Fundamental Analysis. U. S. Dollar Trading (USD) felt more pressure as investors continued to pressure the Dollar on the back of more rumblings from Asian disquiet with US debt. Pending Home sales kept the mood in the market positive with April up 6.7% vs. 0.5% forecast. U. S. Dollar Trading (USD) enjoyed another brief bounce in the Asian session as investor concerns about the GM bankruptcy and weak stocks weigh on sentiment. The main source of gains was against the Yen which came under heavy selling pressure as moody affirmed the US AAA Bond rating. U. S. Dollar Trading (USD) finished the day broadly unchanged as holidays in the UK and USA kept volume low. Some action was seen in Asia as news of a Nuclear test from North Korea caused risk aversion to notch higher.

The British pound is recovering from an earlier belly-ache brought on by the specter of a loss of its AAA credit rating. According to Standard & Poor’s, there is a one-in-three chance that the government’s incessant spending to stave off recession will end in a loss of its ranking. U. S. Dollar Trading (USD) came under pressure at the start of the European session with GBP breaking above resistance at 1.5350 to fresh year highs and taking AUD also to new highs above 0.7700. Markets managed to turn on a sixpence again yesterday, recouping Friday’s losses - and more – amid a slew of more positive inputs. First off, markets took their cue from the impressive rally in Indian equities (up 17%+) after the weekend election result, triggering a full-day circuit breaker after the first 2 hours! U. S. Dollar Trading (USD) received support from the changing mood in the markets with last week being the first in 2 months to show significant Equity downside. Currencies took their cue and dropped against the safe haven USD quite significantly. JPY continued to strengthen outpacing the dollar. The dollar fell below the psychologically-important JPY95.00 mark for the first time in two months versus the yen in Asia Monday, as drops in regional shares and signs of swine flu spreading in Japan fueled demand for what dealers see as safe currencies.

The U. S. currency fell to JPY94.55, its weakest level since JPY94.15 on March 20. U. S. Dollar Trading (USD) felt more pressure as traders tested the dollars downside once again. A small rise in US stocks and better than expected US trade data prompted more risk taking. In vestors have begun the week selling equities, with US stock indices opening in the red and the DJIA and S&P500 staying there through mid morning. U. S. Dollar Trading (USD) finished the week at multi-month lows against the Euro as better than expected US Job Data allowed risk appetite to jump another notch higher. April Non-Farm Payrolls were down -539K vs. -590K forecast. There are two standard definitions of recession. The first, two succeeding quarters of negative GDP is traditional, straightforward and evident as the statistics are released. Non-Farm Payroll beat expectation by showing -539k contraction in April comparing to - expectation of -620k and much better than upwardly revised -699k in March. U. S. Dollar Trading (USD) finished the week at multi-month lows against the Euro as better than expected US Job Data allowed risk appetite to jump another notch higher. April Non-Farm Payrolls were down -539K vs. -590K forecast. US equities were bullish today. The DOW gained 101.63 points, up 1.21%. The S&P gained 15.73 points, 1.74%, to close well above the 900 level at 919.53. Free Forex Trading Courses. Want to get in-depth lessons and instructional videos from Forex trading experts? Register for free at FX Academy, the first online interactive trading academy that offers courses on Technical Analysis, Trading Basics, Risk Management and more prepared exclusively by professional Forex traders.

Most Visited Forex Broker Reviews. Risk Disclaimer: DailyForex will not be held liable for any loss or damage resulting from reliance on the information contained within this website including market news, analysis, trading signals and Forex broker reviews. The data contained in this website is not necessarily real-time nor accurate, and analyses are the opinions of the author and do not represent the recommendations of DailyForex or its employees. Currency trading on margin involves high risk, and is not suitable for all investors. As a leveraged product losses are able to exceed initial deposits and capital is at risk. Before deciding to trade Forex or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite. We work hard to offer you valuable information about all of the brokers that we review. In order to provide you with this free service we receive advertising fees from brokers, including some of those listed within our rankings and on this page. While we do our utmost to ensure that all our data is up-to-date, we encourage you to verify our information with the broker directly.

Risk Disclaimer: DailyForex will not be held liable for any loss or damage resulting from reliance on the information contained within this website including market news, analysis, trading signals and Forex broker reviews. The data contained in this website is not necessarily real-time nor accurate, and analyses are the opinions of the author and do not represent the recommendations of DailyForex or its employees. Currency trading on margin involves high risk, and is not suitable for all investors. As a leveraged product losses are able to exceed initial deposits and capital is at risk. Before deciding to trade Forex or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite. We work hard to offer you valuable information about all of the brokers that we review. In order to provide you with this free service we receive advertising fees from brokers, including some of those listed within our rankings and on this page. While we do our utmost to ensure that all our data is up-to-date, we encourage you to verify our information with the broker directly. Daily forex fundamental analysis. Get the best parts of DailyFX. com in the new DailyFX App. Weekly Fundamental Forecast: Dollar Sheds Gains During Jackson Hole, Political Risks Fight Summer Lull.

The Dollar shed gains as the Euro and Pound retook some lost ground amid lackluster Fed minutes, political risk, and the Jackson Hole symposium. Next week, political uncertainties, NAFTA negotiations. Continue Reading. Learn from the DailyFX Experts. Find out where key markets might be headed next. Learn how to get started trading financial markets. Explore strategic concepts to enhance your trading knowledge. Dollar Fails to Launch Major Technical Breakout, Reversal Risk Rising Rapidly. The Dollar has transitioned from a breakout after a 12-month, inverse head-and-shoulders pattern directly into a bearish standard, head-and-shoulders in the matter of a week. Has the bullish wave proved a dud? Continue Reading.

DXY Index Threatens Key Break after Powell’s Jackson Hole Speech. Gold Price Rebound Fueled by Less-Hawkish Chairman Powell. Gold, Crude Oil Prices May Weaken Further on Hawkish Powell Speech. S&P 500 Closes a Record High, Dollar Bull Trend Deflated as Liquidity Tames Headline Tumult. Charts for Next Week: EURUSD, USDJPY, USDCNH, and Gold Price. What if Fear of Trade Wars, Brexit or Rate Hikes Suddenly Vanished? EURUSD Weekly Technical Outlook: Euro Bouncing or Reversing? The recent turnaround in the euro has the downtrend in question, how things play out over the near-term could go a ways towards helping determine whether it’s a bounce or beginning of a rally… Continue Reading. AUDUSD Prices May Consolidate as Downtrend Remains Intact. Nasdaq 100 Chart Winding Up for a Breakout. GBPUSD: Decrease in Net-Longs Triggers Bullish Outlook. Sentiment data provided by IG. Sentiment data provided by IG. Take a free trading course with IG Academy. Our interactive online courses help you develop the skills of trading from the ground up. Live, interactive sessions.

Develop your trading knowledge with our expert-led webinars and in-person seminars on a huge range of topics. Free upcoming webinar. S&P 500 Closes a Record High, Dollar Bull Trend Deflated as Liquidity Tames Headline Tumult. Charts for Next Week: EURUSD, USDJPY, USDCNH, and Gold Price. What if Fear of Trade Wars, Brexit or Rate Hikes Suddenly Vanished? Forex Economic Calendar. About your FOREX. com Demo Account. A demo account is intended to familiarize you with the tools and features of our trading platforms and to facilitate the testing of trading strategies in a risk-free environment. Results achieved on the demo account are hypothetical and no representation is made that any account will or is likely to achieve actual profits or losses similar to those achieved in the demo account. Conditions in the demo account cannot always reasonably reflect all of the market conditions that may affect pricing and execution in a live trading environment. Forex Fundamental Analysis for 2018. Using fundamental analysis to trade Forex can be very dangerous when it is not done right. Ironically, traders relying upon fundamental analysis rather than some form of technical analysis tend to lose money more quickly than if they just stuck with technical analysis.

This seems strange and counter-intuitive, but it is true. In this article, I will explain why using fundamental analysis exclusively can be dangerous, then I will show how the right type of fundamental analysis can be used to make your trading better, if it is something you really want to use. I will focus on what the fundamental situation will likely be at the start of 2018. You certainly don’t need to use fundamental analysis to make money over the long-term in the Forex market, but it can help. Why Mechanical Fundamental Strategies Perform Worse than Trend-Following Strategies. Fundamental analysis sounds like a sensible, conservative method to use to decide where to put your money. After all, if you were considering investing in a stock, you would feel good about performing due diligence on the company, checking its financial position, and being convinced that the economy was likely to grow over the time horizon of your investment. So, doesn’t it make sense to feel the same way about the country whose currency you are buying, even if your time horizon is shorter than that of a typical stock investment? Well, it’s a logical approach, but there are two immediate problems in applying this principle to Forex. Firstly, which fundamental indicators are you going to use to make your call on the fundamentals? Secondly, it seems clear that fiat national currencies are far less affected by economic fundamentals than stock markets are, so even if you pick the right variables for your analysis, they are not likely to be very useful. Currencies are not the “stock” of a nation, they are debt instruments issued by its central bank. Let’s consider some of the most popular fundamental analysis indicators which can be applied to currencies: Fair Value: you consider the relative costs of a basket of goods in two different currencies, selling the one which seems overvalued, and buying the one which seems undervalued, hoping the values will merge. It is very logical, but it simply has not worked in recent decades.

It completely discounts the fact that there are good reasons why goods and services are relatively more or less expensive in different countries. Interest Rate Differential: currencies with higher interest rates tend to attract more investment, meaning speculative money should flow from currencies with lower interest rates into currencies with higher interest rates. Therefore, it should be possible to profit from buying currencies with higher rates using currencies with lower rates. An added benefit of such a fundamental strategy is that the overnight fees charged daily by your broker should be low, or even positive in your favor, as they are based upon the market’s expectation of the future rates. The good news is that this strategy has been shown to generally produce a small positive edge. The bad news: the edge is small, and the strategy keeps you out of some great trades. It also tends to stop working during times of market turbulence. There can be strong, long-term price trends going against LIBOR rates for months without end. Furthermore, for some years now we have been living in an era of low interest rates, so the available differentials between the major global currencies are very small. Economic Growth: buy currencies with strong andor increasing GDP numbers, and sell currencies with weak andor falling GDP numbers. This sounds logical, yet there is no evidence it works as a standalone strategy. Central Banks are Key. If typical fundamental approaches are flawed, what can you do? Well, a better fundamental analysis strategy is to be aligned with the positions of the currencies’ central banks.

Consider the fact that any central bank can create as much supply of their currency as they want, and reduce a lot too, as well as (usually) having the power to set the currency’s interest rate. This is a lot of power to move the price. Unfortunately, central banks don’t put up signs saying “tightening” or “relaxing”, which would make this kind of strategy an awful lot easier! Yet it is possible to follow the central bank releases yourself, which are given monthly (in most cases), and to read intelligent commentary on them, to develop an opinion. You will probably require the intelligent commentary as even if you read the full texts of the central bank releases, unless you are very clear what you are looking for, you probably will not be able to come to a correct conclusion. Another approach which works well is to look for surprises in central bank releases. For example, at the time of writing, the Bank of Canada has just made it clear that they see a rate hike in January 2018 as less likely. This surprised the consensus, and the value of the Canadian Dollar continues to fall. It is normal for most central bank releases to move their currency, but when there is follow-though the next day instead of a reversion back to the mean, that can be a good sign that you have a fundamentals-driven price move going on which is likely to last longer. Central Banks in 2018. A good starting point for a productive program of Forex fundamental analysis is to make a list of the major central banks, in order of importance, and to summarize their attitude towards their currency. Then it makes sense to check whether there are any trends which are matching any identified divergence between central banks. It is not an exact science, and it is important to realize that there are other major fundamental factors which can come into play. An excellent example is Britain’s impending departure from the European Union, the exact terms of which are still under negotiation.

As Britain’s economy is highly dependent upon the terms of its trade with the European Union, the terms of that trade are going to affect the pound, with the pound advancing on a softer Brexit and falling on a harder one. So here is my 2018 assessment of the currency stances of the important central banks (in order of importance), ranked by order of importance to the Forex market. Federal Reserve (U. S. dollar) – tightening monetary policy, but concerned about the lack of inflation, meaning inflation rate data becomes important. If inflation is higher than market expectations, the USD should tend to rise on anticipation of more and faster future rate hikes. European Central Bank (euro) – minor, very cautious tightening is possible in the shape of unwinding the balance sheet, but interest rates remain negative and inflation is almost non-existent. It is still hard to imagine rate hikes. Bank of Japan (Japanese yen) – there is some economic growth, but it looks as if the BOJ is on autopilot as no tightening or rate hikes are expected throughout the entirety of 2018 and beyond. Inflation remains very weak. Bank of England (British pound) – there is little economic growth, but the BoE seems set on a course of further tightening of monetary policy by hikes in the rate of interest, because the rate of inflation has climbed to a relatively high 3.1% annualized rate. Without the inflation, there would probably not be any hikes happening soon. Swiss National Bank (Swiss franc) – this is a special case. As almost all major national currencies are extremely weak, the SNB maintains an extremely loose monetary policy with a negative interest rate of -0.75% to stop the Swiss Franc from appreciating as a safe-haven investment. The policy has succeeded in stabilizing the Franc, and this currency is an extremely dangerous bet. It has a strong tendency to revert to the mean and stay stable, rather as Gold has over recent years. Growth and inflation are extremely weak, so the SNB is determined to stop the currency from appreciating. Bank of Canada (Canadian dollar) – GDP and inflation have been relatively healthy, with the interest rate also at a reasonable level of 1.0%, but recent concerns about a slowing of growth have staved off the likelihood of monetary tightening happening soon.

This is one to watch carefully, but we might be seeing the start of a fundamentally-driven long-term weakening in the Canadian Dollar. Reserve Bank of Australia (Australian dollar) – despite historically low interest rates, inflation and growth remain stubbornly low, and they seem to be taking a turn for the worse as poorer than expected trade data comes in. While it doesn’t look like we are going to see any weakening of policy, further tightening appears to be convincingly off the agenda. Reserve Bank of New Zealand (New Zealand dollar) – growth is relatively healthy, though the GDP is still barely 1%, and the rate of inflation is marginally higher than the relatively high interest rate. The new government seem to be determined to pursue a balancing act of avoiding any real tightening while also avoiding significant loosening. All this suggests a somewhat weak monetary policy, although the market has been impressed by the nomination of a new Governor of the RBNZ who is expected to keep managing inflation as a high priority. Conclusion on the State of Forex Fundamentals. There is no doubt that the global picture of the advanced economies listed above is one of a generally weak monetary policy, with little divergence in terms of growth, policy, or interest rates. This points to a dull Forex market, which is what we are currently experiencing. However, it can be said that fundamentally, the U. S. dollar currently looks relatively strong, followed by the euro. Continuing weakness looks most likely in the Canadian dollar. This suggests that the most fundamentally convincing Forex trades which match the technical picture are long USDCAD, and possibly long EURCAD as well. It is crucially important to only trade fundamental conclusions you might arrive at when they are matched by the technical picture.

There should be a reasonably long-term trend in the direction of the fundamentals, or at least it should be clear that the price is continually failing to move against it. This is the best way to use fundamental analysis in Forex trading. Now, this would suggest that the trades best supported by a combination of fundamental and technical factors are likely to be long USDCAD, long EURCAD, and possibly long USDJPY as well. Fundamental analysis, just like technical analysis, requires constant review of the situation, which can change from month to month, so the current picture is not guaranteed to last throughout 2018.



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