Fundamental analysis allows a speculator to assess the macroeconomic environment in which the national currency is, to see outlooks of economic development. This is a significant indicator, because if the economy is in decay, it is hardly that someone would like to buy its currency or invest in companies (buy the stock, for example). Fundamental analysis is essentially long-term, since the economy – “long player”, if some process has begun, then it will finish not soon. Its use gives the speculator vision of the situation as a whole.

And the main moment in the fundamental analysis is the tracking of news that can have economic and political nature, but also it is taken into account different vis majors, natural disasters, etc. To news of an economic nature contains such main indicators as GDP growth, unemployment, inflation, development of industrial production, etc. In total there are about 30 major macroeconomic indicators, which will influence the change of course very much. This news may be the information about changing the basic interest rates, a press conference of the chief of the Central Bank. The main account interest rate -is the percent, under which the country’s central bank makes loans to commercial banks. The discount rate is the basic mechanism that is used to management of inflation. And the higher it is, the more appealing a given currency to investors is.

The publication of this data occurs in a strictly defined time and date, and information about the schedule for its release can be got from special economic calendars. And at that moment, when the news appears on the market, according to published data, a sharp bound of the course may occur in the market.

Effect of news on exchange rate.

Let’s look at an example of Jan. 22, 2008. Assume, you plan your transaction and would like to purchase Euros. And you know that today it will be released the decision to change the basic discount rate of the European Central Bank (ECB). Until that time there were gossips and speculations at the market that the rate may be lowered because of some slowing of economic development in the Eurozone, and then the appeal of assets for investors in the Euro would be lowered. Therefore, the decline of the euro against the dollar could be seen. When the decision was published, it became clear that rate was left on the same level (4%), the market breathed a sigh of relief, and the course hoicked. The subsequent press conference of ECB President Jean-Claude Trichet gave optimism to the traders, during which he said that the ECB will promptly take action to maintain the steadiness of Euro.

Here is how a trader may apply fundamental analysis in his trade. But that’s not all. We considered an example of the so-called short positions, when your transaction lasted only several hours. But the continuance of the deal may be several days or even weeks. And here, to forecast the movement of the rate, you also use the fundamental analysis.

Currently people are searching for additional or even primary sources of income as never. World economy is still in tough condition, and to find a well-paid job is quite hard. And forex is one of the ways to make some money. To trade successfully one needs to know events on the market, so forex news is of great help here. Those who don’t know where to receive forex market news can take advantage of the Internet. Just type “forex news trading“, for example, in Google or other search engine and you will get many news sources to choose from.