An analysis of the fundamental factors
Fundamental factors are the key macroeconomic indicators of the state of the national economy, working in the medium term, affect participants in the foreign exchange market and the level of the exchange rate.
Agency Reuters published a special page forecast major economic indicators of developed countries: ECI / I.
Normally this would be macro-economic statistics published by national statistical offices (in the U.S. – the statistics bureau in the ministry, in Russia, the Russian Federation State Committee for Statistics).
News agency Reuters delivers users recent statistics at the time of publication (release of data). Known schedule the publication of statistics from different countries: in the day and how much any (figures) will be officially announced, and immediately transferred to the Reuters system, Having emerged on-screen monitors throughout the world.
By the day of the week given the weighted average forecasts of economists and research centers on the expected performance of National Statistics (column FORECAST).
Are given the time of publication, as well as previous indicators (column REVS).
These data are carefully analyzed by dealers and analytical departments of banks, and on that basis develop a scenario of the exchange rate and the tactics of arbitrage.
Usually in world currency markets, where 80 percent of arbitrage transactions are conducted with the U.S. dollar, have the greatest impact on the U.S. economy, which leads to an increase or decrease the value of the dollar relative to other currencies. There are two time dimensions of the fundamental factors in the exchange rate:
Long-term impact, that is, given a set of fundamental factors determine the status of the national economy, and hence the trend changes in the exchange rate over the months and years. This medium-term forecasting of the course used for the opening of the strategic positions.
For example, the multi-year negative balance of trade with Japan, the U.S. is causing a steady decline in the dollar to the Japanese yen (from 250 in 1985 to 80 in 1995). For the medium and long-term impact are taken into account the statistical indicators for the period more than a month (quarterly, annually).
Short-term, that is, published a statistical indicator of the impact on the currency exchange rate in force for a few hours or sometimes minutes. For example, the publication of data on reducing the U.S. trade deficit with Japan could lead to some increase in the dollar to the yen for several hours (from 88.20 to 89.50).
Short-term impact on the course of providing indicators for short periods (a week or month).
Foreign exchange dealers, the decision to buy or sell the currency after an on-screen messages about the importance of the economic indicators, should immediately respond to a number of issues, from the right decision based on the size of the profit or loss.
An analysis of the fundamental factors
Exchange rate parity
Purchasing power
Gross domestic product – GDP
The level of real interest rates
Unemployment rate
Inflation
Balance of Payments