The Fundamental Analysis of Foreign Exchange

The price of the foreign exchange is a kind of state of equilibrium that reflects the currency supplies and demands. The two main factors that influence the demand and supply are the interest rate and economical performance. In each economic indicator, like the gross national product, foreign capital inflow or perhaps the international trade representative are the national economical performance, also decides the national currency supplies and demand. Each day there are different kinds of economic indicator announcement, Forex traders must have the ability to judge which is more important, but within these numerous data, the interest rate and the international trade are the most worth taking.

The fundamental analysis involves finance, economic theory and political situation development, thus it is a factor which judges the demand and supply. The most obvious difference between the fundamental analysis and the technical analysis, the fundamental analysis studies the reasons behind the market movement, but the technical analysis studies the effect of the market movement.

When estimating a country currency by using another country currency, basic surface analysis includes the macroscopic economic indicator, property market as well as political factor research. The macroscopic economic indicator includes the numeral and economic growth rate, by essential factor computation and so on GDP, interest rate, inflation rate, unemployment rate, money supply, foreign exchange reserve as well as productivity. Property market includes stock, bond and real estate. The political factor can affect a country government's confidence level, the social stability climate and confidence.