Fundamental analysis is a market trend forecast based on fundamental factors. Fundamental analysis focuses on the analysis of basic economic, political and environmental factors, such as economic statistics, economic indicators and central bank policies, from a macroeconomic perspective. Unlike technical analysis, fundamental analysis focuses on how prices should change, not how prices have changed. In conducting fundamental analysis, investors need to pay close attention to the release of important economic data and the latest developments of central banks.

Many economic and political s that have a direct impact on the market. Therefore, it is more important that traders understand how to interpret this information and convert it into a successful, instructive transaction.

The general impact of currency exchange rates of several major macroeconomic indicators:

Interest rate

• There is not an economic and financial indicators like interest rates can be as able to track the movements of the financial market. First of all, it is worthwhile to grasp that interest rates are the means by which the central bank regulates the currency and are a link in the national credit monetary policy. The short-term interest rate determines the credit rate. If inflation occurs, the central bank will influence the national currency according to its own goals, that is, through interest rates. The central bank curbs inflation by raising interest rates and reducing the amount of money in circulation. If the central bank wants to increase the currency in circulation, it can reduce the interest rate. In general, currencies with higher interest rates have lower interest rates than currencies with lower interest rates, and investors are more willing to buy currencies with higher interest rates. In summary, high interest rates can increase the attractiveness of a currency.

 

Gross domestic product (GDP)

• GDP refers to the value of all goods and services, and the relevant departments will release the latest data every quarter, which is the most important indicator of economic status. The increase in GDP indicates that the economy is stronger, with the appreciation of the local currency.
• The US Department of Commerce publishes that gross domestic product (GDP) refers to the value of all final products and services produced in a country or region's economy over a certain period of time (one quarter or one year), often recognized as a measure. The best indicator of the state of the country's economy. It can not only reflect the economic performance of a country, but also reflect the national strength and wealth of a country. In general, GDP has four distinct components, including consumption, private investment, government spending, and net exports. Formulated as: GDP = CA + I + CB + X where: CA is consumption, I is private investment, CB is government expenditure, and X is net export value. Higher-than-expected GDP data will generally benefit more dollars, and vice versa.
• Release Date: The initial value of the previous quarter is announced on the 28th of the first month of each quarter, and the revised value and final value are announced separately before and after the second and third months.
• Released by: US Department of Commerce
• Publication website: https://www.bea.gov

 

Non-farm payrolls (NFP)

• NFP measures new employment opportunities created by non-agricultural units in the past month. The indicator is calculated by the Bureau of Labour Statistics and monthly statistics on employment development and compensation in the US economy. The indicator covers 500 industries and includes more than 400,000 companies (manufacturing, construction, trade, services, real estate, finance, insurance, etc.). Non-agricultural employment data is a very strong indicator of employment changes in the country. The increase in this indicator indicates an increase in employment and generally raises the dollar.
• The US Department of Labour announced that non-agricultural employment changes are an indicator of changes in monthly employment in all non-agricultural companies. Total non-agricultural employment refers to the number of workers who produce approximately 80% of the total US gross domestic product. It is the most important individual data in the US Department of Labour's monthly labour market report. This data is one of the most important data in the US economic indicators and has a huge impact on the financial market. The data fluctuates greatly, and the data of last month or even the previous cycle is usually corrected while the data of the previous month is published, and sometimes the correction is large. The rise in non-agricultural employment indicates that employment growth will benefit the US dollar; conversely, if non-agricultural employment continues to decline, it will be negative for the US dollar.
• Release Date: The data for the previous month is released on the first week of each month, and occasionally adjusted to the second week of Friday.
• Released by: US Department of Labour
• Publication website: https://www.dol.gov

 

Consumer Price Index (CPI)

• The Consumer Price Index reflects changes in the prices of goods and services over a period of time, based on the value of the current basket of goods and services compared to the previous month or last year. The increase in the number of values reflects the pressure on the region to raise interest rates.
• The US Department of Labour announced that the core consumer price index is the most volatile component of food and energy, which are particularly sensitive to temporary economic factors such as oil prices, natural disasters and seasonal factors. Therefore, the core CPI provides more stable inflation data, but at the expense of ignoring the economic impact of the two types of important commodities mentioned above. Therefore, if the index is high, it will benefit the US dollar. If the data is lower than expected, it will be negative.
• Release Date: The data for the previous month will be released around the 15th of each month.
• Released by: US Department of Labour
• Publication website: https://www.bls.gov/cpi/

 

Producer Price Index (PPI)

• The Producer Price Index mainly reflects the price change of the means of production. The index does not consider the price of imported goods and services, but imports of raw materials and components affect it. Since the index is forward-looking, if the index is higher than expected and there is a possibility of inflation in the future, the central bank and the latter may implement a tightening monetary policy, which will have a positive impact on the national currency. If the index declines, it will have the opposite effect.
• The US Department of Labour announced that the Producer Price Index is a measure of the total cost of a basket of goods and services purchased by a company. Since companies ultimately have to transfer their costs to consumers in the form of higher consumer prices, it is generally considered that changes in the production price index are useful for predicting changes in the consumer price index. PPI is used as an early indicator of inflation. If the data continues to rise, it will increase the Fed’s rate hike expectation, which will benefit the US dollar, and vice versa.
• Release Date: The data of last month is released around the 15th of each month.
• Released by: US Department of Labour
• Publication website: https://www.bls.gov/ppi/

 

Durable Goods Order

• This indicator calculates the number of durable goods ordered in the next month, which reflects manufacturing activity. Durable goods have a service life of more than 3 years, including furniture, automobiles, etc., and can be divided into four categories: metal, mechanical engineering, electrical equipment, transportation orders. The index is generally considered to be a leading indicator. Due to the high price of durable goods, the increase in orders shows the consumer's ability to consume in the future. Therefore, the growth of this indicator is the key to medium- and long-term economic development. It is generally regarded as a positive domestic currency, and the decline in data is contrary to the situation.
• The US Department of Commerce announced that durable goods orders refer to the total number of orders for durable goods received by manufacturers. Durable goods are commodities that are planned to continue to be used for three or more years, such as heavy industrial products such as automobiles and airplanes. Because the production of durable goods often requires a lot of manpower, material resources and financial resources, it has a great influence on the development of the US economy. The final data shows the level of activity in the US manufacturing industry. If the published data is recorded at a high level, it will benefit the US dollar, and vice versa.
• Release Date: The revised value of last month's data will be announced in the first week of each month, and will be announced on the same day as the factory order.
• Released by: US Department of Commerce Statistics Bureau
• Publication website: https://www.census.gov

 

Number of people applying for unemployment benefits

• This data reflects the change in the number of people applying for unemployment benefits last week. Based on the average level of change in four weeks, the conclusion of domestic unemployment can be drawn. The steady decline in the number of jobless claims indicates that the labour market has improved, the economy has grown, and it has helped the dollar rise. An index of more than 500,000 means problems in the labour market. There is an inverse relationship between the number of initial jobless claims and the number of non-agricultural employment. The increase in first-time unemployment benefits means a decrease in the number of non-agricultural employment.
• The US Department of Labour announced that the number of initial jobless claims is the number of people who applied for unemployment benefits for the first time last week. The data is a good complement to the monthly employment report. When more people apply for unemployment benefits, it means employment is reduced, and vice versa. Investors can use the report to seek clues about economic growth, but the data is volatile. A reduction in the number of initial jobless benefits will benefit the US dollar, and vice versa.
• Released by: of data as of last Friday on Thursday.
• Released by: US Department of Labour
• Publication website: https://www.dol.gov

 

Trade Balance

• This data measures the sum of the ratios between the import and export of goods. If the sum of the prices of the exported goods exceeds the import price, the trade account is a surplus. If the import exceeds the export, the trade account is in deficit. In general, a trade account surplus shows a country's economic growth and the appreciation of its currency.
• The US Department of Commerce announced that the trade account is the difference between the total value of exports and imports of a country at a given time, reflecting the relationship between the country's imports and exports. If the export is greater than the import, the data is positive, usually called the trade surplus (surplus); otherwise it becomes the trade deficit (deficit). Trade accounts are sometimes subdivided into commodity trade accounts and service trade accounts. If the data is better than expected, it will benefit the US dollar, and if it is not as expected, it will be negative.
• Release Date: The data of last month is
• released around the 11th of each month. Released by: Economic Analysis Bureau of the US Department of Commerce
• Publication website: https://www.bea.gov

 

Unemployment Rate

• The data calculates the total number of unemployed labourers, which is displayed as a percentage, which reflects the actual situation of the job market and also reflects the production activities. If the number of employed people rises, it reflects the upward trend of the economy, which is conducive to the rise of the exchange rate, and vice versa. It is a key macroeconomic indicator.
• The US Department of Labour announced that the unemployment rate refers to the state of not receiving any paid work. Since this indicator can be used to judge the employment situation of all working people in a certain period of time, the unemployment rate figure has always been regarded as an indicator reflecting the overall economic situation. If the unemployment rate rises, it means that the US labour market is weak, which will drag down the development of the US economy and bearish the dollar. On the other hand, if the unemployment rate falls, it will benefit the US dollar.
• Release Date: The data for the previous month is released on the first week of each month, and occasionally adjusted to the second week of Friday.
• Released by: US Department of Labour
• Publication website: https://www.dol.gov

 

Retail Sales

• This data shows changes in the number of sales in the retail industry. Since the demand of consumers is the main driving force of their economies, if the retail sales data rises, it means that the country's economy is rising, which is conducive to the exchange rate rise.
• The US Department of Commerce announced that retail sales are the total value of goods sold in cash or credit, except for the service industry, including all stores that are primarily engaged in retail business. Data is commonly used by governments, businesses, and business groups to observe current economic conditions and trends. Consumer spending is critical to the US economy, so the index is considered an important factor in the US economy. If the published data is recorded at a high level, it will benefit the US dollar. Conversely, if the data is recorded at a low level, it will be negative for the US dollar.
• Release Date: The data of the previous month will be announced around the 10th working day of each month.
• Released by: Statistics Bureau of the US Department of Commerce
• Publication website: https://www.census.gov