Hi everyone
Is there a thread on this forum on how and where to start with fundamental analysis for forex?
Like a Fundamental Analysis 101 thread.
I can’t find one.
If not could you kindly direct me to other sources.
Because when i google it I end up with fundamental analysis for stocks and others.
Really appreciate your help.
Good luck finding much in the way of strong resources. The vast majority of forex trading at our level is done technically. Forex fundamentals are much more complex than for stocks or even something like the fixed income market. My recommendation would be to find a good book in macroeconomics (especially global) as those are the factors which are at play in currency valuations.
In response to your search for a forum thread that deals with FOREX Fundamental analysis - let�s see if we can get one started today.
I have been recording and analyzing live trades since March of this year, all trades were conducted during certain Government and some private Fundamental Announcements.
The analysis led me to the following broad conclusion - that FOREX traders react, almost in unison, to surprises.
What kind of surprises? Many announcements are predicted by leading economists, when the prediction is wrong, the market moves extremely fast in one direction or the other, [U][B]usually[/B][/U] in the direction of the benefiting currency.
This means that if a prediction is way off base and the Fundamental Announcement is very important to the economy of that country, there is a [B][U]probability[/U][/B] that a currency pair will move in a certain direction.
This Friday, October 3rd at 8:30 AM ET, the [B]Non-Farm Employment Change[/B]
and the [B]Unemployment Rate[/B] will be released by the [B]Bureau of Labor Statistics[/B]
along with some other reports. The Non-Farm and Unemployment Rate are the 2 most watched.
The Non-Farm Employment Change can produce a huge spike of a currency pair at the time of release, and quite often for some time after, a currency pair may continue on in the same direction.
If the Non-Farm Employment Change is different from the conscious prediction by a large enough amount - the market moves rapidly in the direction (most of the time) of the favored currency.
Example:
09-05-08 - 8:30 AM ET:
USD Change in Nonfarm Payrolls (AUG) prediction= -71K previous= -51K actual= -84K
As you can see Non-Farm Payrolls decreased 13K below the prediction - really not very much, but bad for the USD and the market did move - here is what happened .
[B][U]USD/JPY[/U][/B] spiked down almost 50 PIPS in one minute, did not retrace, the 2nd minute the pair moved down another 25 PIPS and retraced about 10 PIPS - for the rest of the hour the pair continued moving up.
Evidently the traders did not think the discrepancy from the prediction was serious enough. And there may have been other factors going on at the time.
If you all have a chance to watch the Non-Farm Employment Change, and have an opinion, I would like to hear from you.
if you want to get proper fundamentals don�t hesitate to read Joseph Stiglitz articles (like the one today published in the guardian) other ways go and check a reliable source of fundamental news, like the tradeviewforex web site
Hi,
Joseph Stiglitz bail-out-blues?
Thanks for the info.
Can is better write more than fundamental analytics?
As we should know (if doing a fundamental analysis), the Federal Reserve, the European Central Bank and other central banks from Britain and Switzerland to Canada and China announced rate reductions within seconds of one another. The British government separately announced a plan to pump billions of pounds into the country�s leading banks as part of a plan that would result in considerably greater government influence over the financial sector there.
The historic piece of international co-ordination marks an effort to curb the risk that the intensification of the credit crisis could lead to a severe global recession.
Please pay attention to this : The International Monetary Fund has drawn up emergency plans to bail out governments affected by the financial crisis, after warning yesterday that no country would be immune from the ripple effects of the credit crunch.(isn�t it that financial terrorism?)
Dominique Strauss-Kahn, the Fund’s managing director, said it could make “hundreds of billions of dollars” available to either rich countries in the west, or to developing nations.
Amid fears that the extreme turbulence of the past month will push governments to the brink of financial collapse, Strauss-Kahn said he had asked the Fund’s board to activate its fast-track loan procedure. Strauss-Kahn said, “we are ready to answer any demand from a country facing problems.” (he he he he, I would like to belive that, hehehe, cof cof , sorry just makes me laugh)