Depending on the principles on which the market analysis is based, it can be fundamental or technical. Conceptually, technical analysis is based on the correlation of supply and demand in the market. These two concepts form the price charts and obey certain mathematical laws. Fundamental analysis has more global criteria and is based on political, economic and financial factors.
Fundamental analysis covers all information of an economic, political and financial nature. It affects the formation of the price and its movement indirectly or directly. Economic indicators of countries with developed economies always influence exchange rates.
The fundamental analysis takes into account such indicators as:
- rate of inflation;
- gross national product;
- gross domestic product;
- unemployment rate;
- price indices for food and non-food products of wide use;
- commodity index;
- trade and balance of payments.
The unemployment rate is the ratio between the total number of the able-bodied and unemployed population. In an ideal scenario this figure should not exceed 6%. The increase of this figure directly affects the exchange rate towards its fall. The same negative impact on the price of the currency has inflation, which is measured by the growth rate of prices for popular goods. At the same time, unemployment and inflation indicators are interdependent.
Gross national product is a whole complex and includes various indicators such as consumption, investment levels, imports and exports, government spending. These are all direct indicators of the state of the economy of any country. The stable exchange rate is a direct evidence of high GNP. High indicators of gross national product testify to the inflow of investments from outside and a good state of the economy, which in turn drives up demand for the national currency.
The scope of fundamental analysis includes a whole list of events that are important for world countries. These are parliamentary and presidential elections, social and economic reforms, international treaties and other normative documents.
The exchange rates of national currencies are directly affected by natural disasters, extraordinary events, terrorist acts, military actions and other events that can not be predicted.
Trading Group will teach the basic principles of analysis
Fundamental analysis is a key part of work in the foreign exchange market and at the same time – rather complicated. This is due to the fact that the same factors under different conditions may have a different impact on the market. They may also be insignificant or bear direct influence to the same time. Only thorough deepening and the study of cause-and-effect relationships provide a holistic picture of the understanding of the main processes in the securities market.
Fundamental analysis passes through a whole range of factor and indicators of different countries-participants in the economic process. Qualified analysts of our company study all the processes, their interaction and influence on the market on a daily basis. We also provide special training courses for the basics and conducting the most important market analyzes.