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Forex Trading Fundamental analysis

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Forex Trading Fundamental analysis

Forex Trading Fundamental analysis takes into account the exchange rate or prices crossings currencies are related to other macroeconomic variables of countries or economic regions, such as the interest rate, gross domestic product, exports and imports, unemployment, fiscal deficit, etc.

For example, when a country has a large trade deficit in the long term, its currency depreciates. Or if in a country, low interest rates expected, it is expected that many investors will sell bonds of that country to position themselves in other assets, so the demand for the currency would decrease.

What is Forex Trading Fundamental analysis

Forex Trading Fundamental analysis gathers information from a variety of sources, but mainly collects information from key indicators including statistical data on the state of employment, gross domestic product (GDP) of countries, international trade, wholesale, manufacturing indices and interest rate decisions of the major central banks of the world.

In addition, the trajectory of a national currency can respond to political and international events, elections and changes in trade policies of a country. Next to this, the prices of financial assets, especially the coins, are very sensitive to the behavior of commodities such as oil and copper, factors that can determine the rise or fall of a coin.

Thus, fundamental analysis provides an overview of the movement of a currency in the context of the socioeconomic conditions of a country or the world as a whole. In the currency market, investors use fundamental analysis with technical analysis in order to trace the entry and exit points of its operations based on the great source of information that both approaches deliver.

What effects Forex Trading Fundamental analysis


GDP (Gross Domestic Product) growth experienced by a country in a given period of time, is a crucial variable in the fundamental analysis either in periods of economic expansion with an increase in consumption, or during a contraction where premium savings in people. In principle, higher projected GDP will push the price of the country’s currency to rise, while a smaller number will cause a decrease in the value of the currency.


The Balance of trade a country measures the difference between the value of goods and services that a country exports, next to the price of goods and services that matter. A country with a trade deficit will experience a reduction in booking their currencies causing a decrease in the price of its currency and incidentally, making its exports more affordable abroad but more expensive imports.


Inflation highly effects the forex market as the appreciation or depreciation of a currency against another is offset by a change in the differential of the interest rate. This means that currencies with higher interest rates than are appreciated about their par product containment expectations of future inflation and higher returns offered to investors. Thus, a higher inflation figure what the market expects will drive the exchange rate upward, while if the opposite is the currency will weaken.


The unemployment situation or jobless rate measures the strength of the labor market. In countries where much of the economic activity is based on the consumption Internal- as in US where 80% of its expansion responds to the consumption of goods and services, the employment indicator is vital to ascertain the state of health of economic activity. Thus, negative figures showing a deterioration of the labor market adversely affect the price of the currency, while positive data the opposite effect.


Please note that: gaining profit from fundamental analysis largely depends on your brokers MT4 platform functions. If your broker is vulnerable to high slippage problem during the time of news release, you are not going to get expected result from trading. So, while Choosing Forex broker, we would like to recommend you to start trading with a broker that has slippage guard. We recommend you to trade with HYCM Broker to get the best possible outcome of forex trading fundamental analysis. Read review of HYCM Broker to learn more on this.


Chapter 6

Forex Trading Fundamental Analysis

Lesson 1.Forex Trading Fundamental analysis
Lesson 2Fundamental Analysis of Currency Market
Lesson 3Fundamental Analysis of Interest Rates
Lesson 4Fundamental Analysis of Inflation Rates
Lesson 5Fundamental Analysis on Balance of Trade
Lesson 6Fundamental Analysis on Government Factors
Lesson 7Fundamental Analysis: Employment / Unemployment
Lesson 8Fundamental Analysis on GDP
Lesson 9Fundamental Analysis on Geopolitical Risks

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About the author

Md Chhali Uddin

Md Chhali Uddin is a Renowned Financial Analyst. He is also involved with as a writer and financial Analyst. He is a brilliant Financial geek with vast experience in every sector of Currency Trading.

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