1. Overview of foreign exchange fundamental analysis
The so-called fundamental analysis in foreign exchange specifically refers to the analysis of the core elements that affect an economic entity (such as the foreign exchange market, stock market, etc.). Predict macro price trends by analyzing social or other factors, economic indicators, political measures, etc. If we think of the forex trading market as a gigantic clock, the fundamentals are the cogs and clockwork that power it. In foreign exchange trading, fundamental analysis depends on specific fundamental data, and the concept of fundamentals can be learned in detail ("What are foreign exchange fundamentals").
2. Matters needing attention in fundamental analysis of foreign exchange
1. The impact of economic data on the foreign exchange market is reflected in the impact of economic data on the exchange rate. Economic data can reflect the current development of the country's economy. A key factor that determines the exchange rate is the balance of payments. The surplus or deficit of the balance of payments will be reflected in a country's foreign exchange market. If the balance of payments surplus means that the supply of foreign exchange is temporarily greater than the demand for foreign exchange, that is, the supply of foreign exchange exceeds demand, then the foreign exchange rate should fall (depreciation), while the relative domestic currency exchange rate should rise (appreciate); When the balance of payments is in deficit, there will inevitably be downward pressure on the exchange rate of the domestic currency, and there will be a need for an increase in the exchange rate of the foreign currency.
2. The impact of the inflation rate on the foreign exchange market is manifested in changes in prices, which will have an impact on the competitiveness of a country or an economy's commodity and labor services in the world market. In addition, the inflation rate will also affect the real interest rate and affect the supply and demand and exchange rate of the foreign exchange market. When a country's inflation rate is high, the country's real interest rate will fall, and investors' real return on investment will fall, and capital outflows will affect the exchange rate.
3. In the fundamentals of the foreign exchange market, most of the employment data we talk about are non-agricultural data. What needs to be paid attention to in terms of consumption is the PPI and CPI data. If the data is greater than the expected value and the previous value, it is easy to cause a skyrocketing market. If it is greater than the expected value and smaller than the previous value, then the rising market is also the main trend.
Fundamental analysis of foreign exchange is an economic science and a technology, and many foreign exchange investors find it difficult to apply. Therefore experience and knowledge are very important in analyzing and applying fundamental factors. We can improve in the following ways:
1. Systematically study and research basic economic theories, and have a deep understanding of micro and macro economics theories.
2. Regarding the currency or commodity you are interested in, you must also understand key factors such as its production, consumption and political environment.
3. Even if you focus on one or two groups of currency pairs in foreign exchange transactions, you should also look at the entire financial market. Economic globalization affects the whole body, and don't ignore any influencing factors.
4. The fundamental analysis of foreign exchange is particularly important for medium and long-term investors, but short-term traders cannot be ignored. Make your own plans.
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