FUNDAMENTAL ANALYSIS (PART 1) - INTRODUCTION AND US FIGURES

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FUNDAMENTAL ANALYSIS (PART 1) - INTRODUCTION AND US FIGURES



Fundamental analysis considers how global economic news and other events impact financial markets. For example, on a country level, if monetary policies were amended for the benefit of the country’s economy, then it indicates that its currency should gain strength, thus encouraging investors to trade it. Likewise, relatively higher interest rates are generally enticing for investors as they are attracted to assets denominated in the country’s currency, which leads to increased demand, thus boosting its value.To get more news about samtrade fx, you can visit wikifx.com official website.
Below are some of the most important economic figures that affect Forex price movements. Some of these events are typically issued at a specific periodic date (e.g., monthly, quarterly,) which is why you need to either memorize the usual dates or check the economic calendar daily.

Generally, economic indicators are split into three categories, based on the nature of the data and the part of the economy it covers.Leading Indicators: Leading indicators are those that could help in predicting market trends and point to economic adjustments and events before they happen (e.g. bond yields).

Lagging Indicators: Lagging indicators reflect historical data and serve to confirm economic trends and patterns (e.g. consumer price index).

Coincident Indicators: These indicators generally have a large role in the economy and are scrutinized as they release (e.g. gross domestic product).It is defined as the overall monetary value of all produced goods and services in a specific country during a specified period of time. The GDP estimates are released at 8:30 a.m. Eastern Time on the last Thursday of each month, reflecting the previous quarter’s activity.

The first (advance) estimate is released in the first month after the quarter ends. A second revised reading is released in the following month, and a third final estimate is released in the month after.Considered as a lagging indicator, it is the main inflation figure measuring the change in the cost of a bundle of consumer goods and services both on monthly basis (MoM) and an annual basis (YoY). It is released at 8:30 a.m. Eastern Time during the second full week of each month, reflecting the previous month’s data.

The shift in price levels reflects a lot of underlying changes in the economy, therefore, the CPI is a major factor in deciding the Monetary Policy. Additionally, the Forex market is highly affected by the CPI data and what it means for the future of price level. It is also a factor in long-term investment, and changes in the price level often affect the behavior of long-term investors in fixed income (bonds) and commodities markets.Similar to the CPI, the PPI measures inflation by measuring the price of goods at the wholesale level or how much producers are paying for the goods they use in production. This report is released at 8:30 a.m. Eastern Time during the second full week of each month, reflecting the previous month’s data.
The markets consider this one to be the most anticipated report of all. It is usually released on the first Friday of each month at 8:30 a.m. Eastern Time. The headline figure in this report is the non-farm payrolls (NFP), which reflects the number of jobs created or lost during one month, ending in the middle of the previous month. The number includes changes in almost all sectors of the economy, government jobs, and private-sector jobs, which are divided into manufacturing jobs, service sector jobs, and so on. We said “almost” because there is a small number of sectors that are not included in this report. On the top of the list, there are farming (hence the name) and non-profit organizations.

There are other notable numbers included in the report such as the unemployment rate – which discloses the percentage of the unemployed workforce – and the average worked hours per week, as well as the average hourly earnings.

The data released in this report reflects the health of the whole economy, as well as employer sentiment around the future of business conditions as it shows their willingness to add more to their payroll.

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