Disecting and analyzing fundamental data is not easy, and even the “experts” out there don’t always get it right with their predictions. What it all comes down to when trading currencies is interest rates. So when you analyze data think about how this information represents growth in the economy and how an economy’s perceived growth will affect it’s central banks decision on interest rates.
We can look at the US dollar as a recent example. Since Oct '06 up until recently, the market’s focus had shifted from inflation to the housing bubble and a slowing economy. This led to speculation that the Fed will cut interest rates in early 2007, and the dollar dropped all throughout October and November. The value of the dollar was pushed down even further as the central banks for the other major currencies (JPY, EUR, GBP) were getting set to raise their interest rates. Recently, we’ve seen US data (Retail sales, ISM services sector, etc) support the economy and shifted speculation that the Fed will not cut rates until later 2007, and the dollar has rallied accordingly.
So, as we watch interest rates shift or the speculation of interest rate changes by the market, so does the value of the currencies shift.
Now, this is all longer term stuff and you would only have to dig this deep into reports and trends if you hold positions longer than weeks or months, but knowing the process can definitely help you pinpoint market turns.
I hope this makes sense as I have tried to keep it simple as possible. If you have anymore questions please feel free to ask. Good luck and good trading everyone!