More about forex fundamental

Factors driving the market

Forex Fundamental analysis is a method that focuses on financial ratios and events - events that are directly or indirectly affect the currency market movements.

Currency prices like stock prices or other commodities, moves up and down based on supply and demand rules. The high demand will drive the currency has strengthened, and low demand could weaken the currency price.

 

 

 

Forex fundamental factors that may affect important high or low demand for currency can be categorized as follows:

1. 
   

   interest rate

   
   


2. 
   

   economic performance

   
   


3. 
   

   political event

   
   


4. 
   

   market sentiment

   
   


5. 
   

   government interventio

   
   

 

1.Interest rates (Interest rates)

It's important to pay attention to 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 capital inflows, and thus would increase the demand for currency of the country concerned.

2.Economic performance

Some economic data is a fundamental indicator forex which indicates the importance of a country's economic health. High economic growth shown by the data or indicators, forex fundamentals will drive the rate of inflation which can make the central bank raised interest rates.

Research institutions or banks generally have had (and publish) estimate before the release of economic data. The market also will usually move with the fundamental forex forecast to anticipate the surge. If a good estimate, then the price will be relatively strong and vice versa if the forecast is bad, then the price will be relatively weak. Spike in the price movements generally occur if there is a fundamental forex significant difference between actual market forecasts and reports.

3.political event

Elections (Elections), winning party, the president and cabinet structure, the temperature of international politics and war are some fundamental factors that can influence the political forex market.

Compared to other instruments, fundamental forex market is most responsive to political events, and even sometimes the forex fundamental greater than the effect caused by economic factors.

This happens because of a country's security is the cornerstone of the investment. Instability that appears to encourage investors to withdraw funds from the country and incorporate them into other countries that have more certainty. Investors tend to withdraw funds quickly on any forex fundamental signal which indicates the uncertainty of conditions, for example Thai Baht been devalued 10% due to the unrest in Thailand.

4.Market sentiment

Forex fundamental sentiments that form refers to the market expectations are met or not recurrent. Market participants to take positions based on their expectations of the future by reflecting on what is happening constantly. Under conditions where the negative sentiment is strong enough to form, the market will continue to encourage the weaker currency. Even the fundamental forex reports and good economic news along with rising interest rates, the decision 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, as long as fundamental forex market movements are not in accordance with the adopted monetary policy. Fundamental forex intervention is sometimes performed in conjunction or cooperation with other countries to strengthen their effects on the currency.

To simply squat on the fundamental factors driving the forex market, interest rates and inflation rates is the first thing to note, because it affects the flow of money. Inflation rates affect interest rates and productivity. The second is the trust factor, because forex is a fundamental overview of the economic sentiment. The third factor that could trigger a monetary policy intervention.

Noteworthy also is the result of international trade, particularly from the United States that repeatedly form the biggest deficit.