Factors driving the market
Forex fundamental analysis is a method that focuses on financial ratios and events - events that directly or indirectly affect the currency market movements
Currency rates as well as stock prices or other commodities, moves up and down based on supply and demand rules. Strong demand will drive the currency has strengthened and low demand could weaken the currency price.
Fundamental factors that can influence forex important high or low demand for currency can be categorized as follows:
Forex fundamental analysis is a method that focuses on financial ratios and events - events that directly or indirectly affect the currency market movements
Currency rates as well as stock prices or other commodities, moves up and down based on supply and demand rules. Strong demand will drive the currency has strengthened and low demand could weaken the currency price.
Fundamental factors that can influence forex important high or low demand for currency can be categorized as follows:
- Interest rate
- Economic Performance
- Political Event
- Market sentiment
- Government intervention
1. Interest rates (Interest rates)
It is important to consider the interest rate of the currency, because the fact of fundamental importance that move the forex market is the interest rate currency.
Money or capital would flow into the country that offer flowers or a higher yield. The higher interest rates, the higher the incoming capital flows, and by itself will increase the demand for currency of the country concerned.
2. Economic Performance
Some economic data is of fundamental importance forex indicator shows a country's economic health. The high economic growth shown by the data or indicators, forex fundamentals will push the inflation rate which then can make the central bank raise interest rates.
Generally, research institutions or banks already have (and publish) estimates before the release of economic data. The market also will usually move in the direction forecast forex fundamental is to anticipate the surge. If a good estimate, then the price will be relatively strong and vice versa if the estimates are bad, then the price will be relatively weaker. Jump in price movements generally occur if there are fundamental forex significant difference between market expectations and the actual report.
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Important forex fundamental news that could move the market are as follows:
Table 1: Reports of important economic data
Table 1: Reports of important economic data
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3. Political Event
General Elections (Elections), the party of winners, the president and the cabinet structure, the temperature of international politics and war are some fundamental factors that can affect the political forex market.
Compared to other instruments, fundamental forex market is the most responsive to political events, even fundamental forex sometimes greater than the effect caused by economic factors.
This happens because the safety factor of a country is the cornerstone of the investment. The instability that appears to encourage investors to withdraw funds from the country and plant them to other countries which have more certainty. Investors tend to attract funds quickly at any forex fundamental signals that indicate the uncertainty condition, as an example of the Thai Baht was devalued 10% due to the unrest in Thailand.
4. Market Sentiment
Forex fundamental sentiment which is formed based on market expectations are met or not that happens over and over again. Market participants to take positions based on their expectations ahead by reflecting on what happens constantly. Under conditions where negative sentiment is formed is strong enough, the market will continue to encourage the weakening currency. Even fundamental forex reports and good economic news along with the decision to raise interest rates-was not necessarily able to consistently change the price movement.
5. Government intervention
The central bank may intervene in currency markets, by making a purchase or sale, along fundamental forex market movements not in accordance with the adopted monetary policy. Forex fundamental intervention is sometimes done simultaneously or in cooperation with other countries to strengthen their effects on the currency.
For a simple squat about the fundamental factors driving the forex market, interest rate and inflation rate is the first thing to note, because it affects the flow of money. The inflation rate affects interest rates and productivity. The second is the trust factor, because the fundamental forex is the description of sentiment over the economy. All three are factors that can trigger a monetary policy intervention.
Noteworthy also is the result of international trade, particularly from the United States has repeatedly forming the largest deficit.
3. Political Event
General Elections (Elections), the party of winners, the president and the cabinet structure, the temperature of international politics and war are some fundamental factors that can affect the political forex market.
Compared to other instruments, fundamental forex market is the most responsive to political events, even fundamental forex sometimes greater than the effect caused by economic factors.
This happens because the safety factor of a country is the cornerstone of the investment. The instability that appears to encourage investors to withdraw funds from the country and plant them to other countries which have more certainty. Investors tend to attract funds quickly at any forex fundamental signals that indicate the uncertainty condition, as an example of the Thai Baht was devalued 10% due to the unrest in Thailand.
4. Market Sentiment
Forex fundamental sentiment which is formed based on market expectations are met or not that happens over and over again. Market participants to take positions based on their expectations ahead by reflecting on what happens constantly. Under conditions where negative sentiment is formed is strong enough, the market will continue to encourage the weakening currency. Even fundamental forex reports and good economic news along with the decision to raise interest rates-was not necessarily able to consistently change the price movement.
5. Government intervention
The central bank may intervene in currency markets, by making a purchase or sale, along fundamental forex market movements not in accordance with the adopted monetary policy. Forex fundamental intervention is sometimes done simultaneously or in cooperation with other countries to strengthen their effects on the currency.
For a simple squat about the fundamental factors driving the forex market, interest rate and inflation rate is the first thing to note, because it affects the flow of money. The inflation rate affects interest rates and productivity. The second is the trust factor, because the fundamental forex is the description of sentiment over the economy. All three are factors that can trigger a monetary policy intervention.
Noteworthy also is the result of international trade, particularly from the United States has repeatedly forming the largest deficit.
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