- About Us
- Trading Products
- Online Trading
Factors driving the market
Forex Fundamental analysis is a method that focuses on the financial ratios and events - events that directly or indirectly influence the currency market movements
Currency rates as well as stock prices or other commodities, moves up and down based on the rules of supply and demand. Strong demand will drive the currency to strengthen and low demand may weaken the currency.
Important fundamental factors that can affect the forex high or low demand for currency can be categorized as follows:
It is important to pay attention to interest rate of a currency, forex fundamental importance due to the fact that moving the market is the currency rate.
Money or capital will flow into countries that offer interest or a higher yield. The higher the interest rate, the higher the capital inflow, and by itself would increase demand for the currency of the country concerned.
Some economic data are forex fundamental that show the importance of a country's economic health. High economic growth shown by the data or indicators, then those forex fundamentals will push the inflation rate which can then make the central bank raised interest rates.
Generally, research institutions or banks have had (and published) estimates before the release of economic data. The market also will usually move with the forex fundamental forecasts to anticipate the surge. If the forecast is good, then the price will be relatively stronger and vice versa if the forecast is bad, then the price will be relatively weak. The surge in the price movement generally occurs when there is a difference in forex fundamental meaning between market expectations and the actual report.
Forex fundamental news to move the market important are as follows:
Table 1: Important economic data report
General Election (Election), the winning party, the president and cabinet structures, international political tensions and wars are some political fundamental factors that can affect the forex market.
Compared to other instruments, the fundamental forex market is the most responsive to political events, forex fundamental even sometimes greater than the effect caused by economic factors.
This happens because of the safety factor of a country is the cornerstone of investiment. Instability that appears to encourage investors to withdraw funds from the state and implanting them in other countries that have more certainty. Investors tend to withdraw funds quickly at forex fundamental signals that indicate any uncertainties, for example Thai Baht been devalued 10% due to unrest in Thailand.
Forex fundamental sentiment that form refers to the market expectations are met or not recurrent. Market participants take positions based on their expectations of the future by reflecting on what is happening continuously. Under conditions where the negative sentiment formed strong enough, the market will continue to push the currency weakening. Even forex fundamental reports and news along with the good economic decision-rising interest rates were not necessarily able to consistently change of price movements.
The central bank may intervenes in currency markets, by making a purchase or sale, all fundamental forex market movements are not in accordance with the adopted monetary policy. Forex fundamental intervention is sometimes performed in conjunction or cooperation with other countries to strengthen their effect on currencies.
For a simple squat about forex fundamental factors driving the market, interest rates and inflation rates are the first things 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 fundamentals of forex are the pictures of the economic sentiment. The third factor is that monetary policy could trigger intervention.
Noteworthy also is the result of international trade, particularly from the United States who repeatedly make up the largest deficits.