Fundamental Analysis in Forex Trading
Economic indicators and announcements are an essential part of fundamental analysis. Even if you’re not planning on finding trades using fundamentals, it’s a good idea to pay attention to how the overall economy is performing.
Here’s a cheat sheet covering six key indicators and announcements to watch out for.
1. Non-farm payrolls (NFP)
The non-farm payrolls report estimates the net number of jobs gained in the US in the previous month – excluding those in farms, private households and non-profit organisations.
2. Consumer price index (CPI)
The chief measure of inflation is the consumer price index, which measures the changing prices of a group of consumer goods and services.
3. Central bank meetings
As we’ve seen, most traders follow economic figures so they can anticipate what a central bank might do next. So, it only makes sense that we pay attention to what happens when they actually meet and make decisions.
4. Consumer and business sentiment reports
Multiple organisations are constantly surveying consumers and business leaders to create sentiment reports. While the number of reports they produce is staggering, they all play their part in shaping the markets’ expectation for the future.
5. Purchasing manager index (PMI)
Purchasing manager indices measure the prevailing direction of economic trends in a given industry, according to the view of its purchasing managers. They are used as an indicator of the overall health of a sector.
Pay close attention to these fundamentals.
They play a crutial role in trading.
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