Fundamental analysis is a science that studies all movements providing the flow of prices at the macro level with economic developments, decisions about monetary policy, and the relationships among countries about political business cycles, and the developments leading to speculation because of the effects of these changes. The fundamental analysis which has a stern relationship between the country and the world tries to solve the uncertainty by giving meaning to present economic developments through the prices.
Fundamental analysis has a quite limited role and place among investment strategies because of its certain benchmarks. An investor needs to have a serious academic education to analyze and get information about the present dynamics of the economy in international markets. Unlike Forex, in other investment tools, the value of fundamental analysis is higher. Balance-sheet, valid situations, test tools, and a lot of fundamental analysis aren’t so much of an issue at the primary level for the Forex market. Understanding the dynamics stating the value of the currencies in the situation of investment for double parity is crucial with regard to the use of fundamental analysis.
To be aware of the price changes in the Forex market, we need to use some tools to grasp the relations between the country’s currency with other currencies and the dynamic of the country. Sometimes, it might be improbable to track all the data that may affect the country’s monetary system since things such as an important statement from someone, a tweet from the president, a natural disaster, or a press conference of two companies in partnership might change things. Furthermore, these changes can have different effects on the prices of the present cycle. Following these economic and political developments for an investor when we talk about fundamental analysis is very normal and it may lead to confusion.
When any investor who doesn’t have an education about the economy wants to follow fundamental analysis, it is always suggested to follow the “Economic Calendar”. If an investor wants to use techniques of fundamental analysis in the Forex market, analyzing economic data which is the most significant piece in fundamental analysis can be a starting point. When some reports summarizing the economic situation of the country with high effects are announced, it can affect the currency of the country to a great extent. Especially the developments about reserve currency can affect a lot of parity. The investors with no academic knowledge about the effects of economic announcements and expectations are not suggested to take positions before these kinds of economic developments. Even experienced analysts’ expected reflections often don’t match. After the announcement of some data, bulky transactions and high price movements can be dangerous, though it can also give you a chance for big investments. That’s why following economic calendar data and analyzing by knowing their time will be an essential work for the ones who are interested in fundamental analysis in the Forex market.
Announcements about interest rate changes done by the government in the trust of the Central Bank is a development that interests Forex investors as a part of Fundamental Analysis. Any interest rate change of any currency can make a serious difference in demands for that currency and it will also affect the value of the domestic monetary unit of that country since investors are in a tendency to orient to the source which can bring them the most real income. That’s why they prefer well-known deposit accounts that can bring the high-interest rates instead of risky real sectors. Another factor in currency value is the sliding movement of the present money among the fields. To get these effects or effects like these intentionally, central banks can apply to interest rate keys as a part of their currency policies. These interest rate changes and results that are important for Forex investors are viewed in the Interest Rates title.