Fundamental analysis is the study of the economy in general, finance, politics and other factors that reflect and measure the economic system. Which may affect the value of financial instruments. Macroeconomic factors and economic indicators of these countries will help traders to assess the direction of future financial markets.
Each day many economic and political news announcements can directly affect the financial markets. Which includes the forex market as well Therefore, traders should understand how to analyze these information and use it to make profitable trading decisions.
- Economic policy in each countryEconomic policy is a method that countries use to monitor trade, budget, and income distribution. Which makes statements of budgetary policies of different countries as an important indicator in assessing the appropriateness of investing in that country’s currency, if the country has allocated a balanced budget With support for trade And have a progressive economic status The currency of that country should be even more valuable. But on the contrary If the budget policy causes uneven income distribution And does not support favorable economic policies The currency value of the said currency will decrease accordingly.
- Deficit and budget surplusThe countries with the most strong currencies in the forex market are those with less deficits. This means that those countries have a good trading position and are able to lend money to other countries as well.
- Trade levels and trendsIf one country already has a lot of business transactions The currency of the said country will be increased as well. Which will affect all currency pairs associated with this currency In addition, the high trading limit also indicates the ability to compete in the market. Whether the forex market Commodity market or stock market. Economic events that affect trading trends will involve demand and supply in the world market
- inflationInflation will cause the value of the currency to fall Therefore, the inflation rate of a given currency should be at an appropriate level. Because inflation will occur in every country