What is fundamental analysis?
Fundamental analysis in Forex is a type of market analysis which involves studying of the economic situation of countries to trade currencies more effectively.
It gives information on how the big political and economical events influence currency market. Figures and statements given in speeches by important politicians and economists are known among the traders as economical announcements that have great impact on currency market moves. In particular, announcements related to United States economy and politics are the primary to keep an eye on.
What is economic calendar?
Economic calendar is created by economists where they predict different economics figures and values according to previous months. It contains next data:
Date — Time — Currency — Data Released — Actual — Forecast — Previous
For example: If the forecast is better than the previous figure, then US dollar usually is going to strengthen against other currencies.
But when news are due, traders have to check the actual data.
If to look at oil prices, a rising price will result in weakening of currencies for countries which depend on huge oil import, e.g. America, Japan.
A good example of detailed economic calendar can be found here: Forex Economic Calendar
What moves EUR/USD?
US economic indicators by Rank:
1. US Non Farm Payroll — measures new jobs created in States.
2. Interest rates — FOMC rate decisions.
3. US Trade Balance, European Trade Balance — a proportion between exports and imports in US economy.
4. U.S. Current Account
5. US Treasury Inflow Capital (TIC) Data — a measure of how much foreign buying of country's securities takes place.
6. US Gross domestic product (GDP) — a measurement of growth in economy.
7. Federal Open Market Committee (FOMC) Rate Decisions — data about changes in currency rates.
8. US Retail Sales — a measure of strength of consumer expenditure.
9. Consumer price index (CPI) — a measure of inflation in Europe.
Note, that because the US dollar is involved in over 80% of all currency trades, US economic data tends to be the most important in the Forex market.
What moves USD/JPY?
Besides US economic indicators, there are important data of Japan economy with its indicators:
Bank of Japan Monetary Policy Meeting — decides on measures to preserve strength of the currency.
Japanese Trade Balance — Japanese imports versus exports.
Gross domestic product (GDP) — growth in an economy.
Consumer price index (CPI) — a measure of inflation.
Industrial production index — a measure of activity in the Japanese manufacturing sector
Retail sales — a measure of strength of consumer expenditure.
Tankan report — assessment of Japanese business conditions: proportion of "optimistic" businesses to "pessimistic" ones.
Unemployment rate
Fundamentals for GBP/USD
All US economic indicators should be watched plus:
UK Housing Prices — number one indicator for Pound, UK Housing Prices are primary gauge of inflation in the UK.
Bank of England Meeting — provides an outline of monetary policy and changes to currency interest rates.
UK Unemployment rate
UK Retail Sales