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1. Daily commentary in our Daily Market Analysis section.
2. Live Economic Calendar.
3. News feed in our Forex News Timeline.
4. Market updates every Tuesday and Thursday in our Market Analysis Videos section.
5. Market Forecast published every quarter.
6. Yearly Market Overview.

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Fundamental Analysis to Follow the Trend

Fundamentals are basic factors of economic activity and basic economic conditions.

For example, the market moves due to various factors such as the economy, interest rates, and political factors.

The factors that shape that market are called “fundamentals.”

In addition, an analysis method that predicts the future of the exchange rate by analyzing and predicting the fundamentals of each country is called fundamentals analysis.

The fundamentals are diverse and seem very difficult, however, it is important to know the trend of the market at that time.

It is important for people who are participating in the market to know what they are paying attention to and to catch the trend in order to win the market.

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Here are the main fundamentals in the Forex market.

1. Financial policy

The famous one is FOMC, which determines monetary policy in the United States.

It is a decision-making institution that is equivalent to the central banks, and because of the monetary policy of the dollar, which is the key currency, it will attract attention from all over the world.

Basically, monetary easing and interest rate cuts will increase the supply of currencies, which lowers the value of the currencies and weakens them.

2. Inflation rate

The rise in prices means that what you could buy for 1 USD until now cannot be bought if you don’t pay 1.20 USD, so the value of the currency will be relatively low.

If excessive inflation continues, people will not be able to buy things, so they will try to raise interest rates and make the currency more popular.

Then, the currency will eventually be bought, so it is easy to buy a currency that has an inflationary tendency, with the image of rising inflation rate → rising interest rates → higher currency.

3. Political factors

The main political factor that can be mentioned is when national policies undergo a major shift due to a change of government.

It is often said that “do not go against national policy”, and even huge financial institutions do not seem to challenge the trend of the nation.

In 2012, financial institutions all over the world declined to sell yen because of the expectation that the ruling party of Japan would switch to the LDP and promote a “currency depreciation policy.”

Also, as political instability rises, so does the currency of that country.

When political turmoil confounds, economic policy decisions are delayed.

4. Geopolitical risk

Geopolitical risks are risks such as terrorism and certain emergencies, such as the terrorist attacks in the United States and the recent uncertainties about the situation in Syria.

From 9.11 onwards, it changed from “buying dollars in an emergency” to “selling dollars”.

If these happen suddenly, the unexpected events cause major fluctuations in the market price.

Especially in the case of big countries and oil producing countries, stock prices, currency depreciation, bond depreciation and major crashes will occur.

And the probability of a war increasing, so crude oil, gold and Swiss francs tend to be bought.

Other financial markets

The investment funds in the world have been grown to some extent, and the investment funds continue to flow swiftly in the foreign exchange market, stock market, bond market, real estate, etc.

Therefore, it is no exaggeration to say that all markets are linked.

The sub-prime shock started with a fall in real estate prices, which led to a weak stock price and a weak dollar.

Therefore, it is almost impossible for the market to stand on the foreign exchange market alone.