Forex Factory

Daily Forex Fundamentals

Fundamental forex analysis is important to currency traders because fundamental events and factors are the forces that determine economic conditions and currency rates. The largest developed nations and many emerging economic regions make daily announcements that influence national and international forex rates. Central banks, international corporations and currency traders pay close attention to daily forex fundamentals.

Economic Indicators

Forces that determine the economic conditions of a nation are the indicators that drive currency rates. Gross domestic product and the Consumer Price Index are among the major indicators along with employment figures and retail sales. These and many other economic indicators are considered leading indicators, meaning their announcement may affect future economic conditions. The results of these studies are made public by the appropriate financial authorities and released as periodic news announcements. Financial news feeds are also an important source of current events and are available from forex brokers and online vendors.
Economic Calendars

Major economic countries provide specific timetables for a diversity of economic announcements. Forex brokers and online resources offer economic calendars with events and results posted. The Forex Factory lists proposed announcements and the anticipated impact they will have on currency rates (see Resources). Economic events of the major currencies are tracked and charted in a timely fashion, including the relevant forecasts and actual results. Many of the important events can cause substantial volatility in the exchange rates.
Interest Rates

In the United States, the Federal Open Market Committee (FOMC) is charged with establishing monetary policy and setting the federal funds interest rate. Changes in the discount rate impact virtually all areas of the national economy and international economies. Monetary authorities responsible for monetary policy in other countries set the interest rates. The difference in interest rates between currencies affects international trade and currency trading decisions. Discount rate changes and adjustments are one of the most powerful fundamental indicators in currency trading.




Central Banks

The central banks of the collective currency trading nations are among the largest forex traders in the world. Intervention by central banks can dramatically influence exchange rates. There are times when a central bank may intervene to impact the foreign exchange rate and investors would be well advised not to trade against them. Intervention tactics can only be discovered by following economic news and monetary announcements since central banks do not typically broadcast their intentions.