fundamental analysis, market analysis indikatoryFundamentalny depends largely on news factors. News of the Forex market is often unpredictable and unexpected. These include news of political and natural, at least - economic. Particularly strong impact on the Forex market have a war. The expected news usually include economic news, fewer political problems.
Significant impact on economic and financial news provided by the Ministry of Finance and central banks. Ministry of Finance determines the budget and fiscal policy. Its functions include the drafting of the state budget and monitoring its implementation, and management of budget revenues through taxation. Central Bank (CB) defines the monetary and fiscal policy - decisions to influence the currency markets, lending, interest rates, money market regulation.
We list the heads of central banks of leading countries of the world:
U.S. - FOMC - Allan GreenSpan Treasury - Lawrence Summerce - Treasury Secretary
Europe - European Central Bank (ECB) - Willem F. Duisenberg
UK - Bank of England (BOE) - Edward Alan John George
Japan - Bank of Japan (BOJ) - Masaru Hayami
Switzerland - Swiss National Bank (SNB) - Hans Meyer
In order of importance the fundamental factors can be divided into three main groups:GROUP 1:
GDP - Gross Domestic Product
GNP - gross national product
This is one of the key macroeconomic indicators, which is calculated in market prices, the cost of manufactured products and services to the country at home and abroad.
Distinguish nominal (current prices) and real GDP (adjusted for inflation in the prices of base year).
Trade balance (trade balance).
Balance of trade - this is data on exports, which give an indication of the competitiveness of domestic producers and determine the growth of the economy, describing the domestic consumption. Particular attention is paid to U.S. trade balance, Japan, UK and the Eurozone. Reducing the trade deficit leads to higher prices of credit market instruments, increased exchange rate and an increase in stock price. The trade balance published each month the number of 17-20.
Current Account (Balance of Payments).
The balance of payments consists of all commercial and financial transactions of residents of the country. The balance of payments strengthens the economy and currency. The increase in balance means that residents earn more money abroad than take out.
Producer Price Index - PPI (producer price index).
Producer price index estimates the average change in prices determined by producers for their products at all stages of production. Not tracked by a single value, and the change it during a certain period of time. Do not include imported goods, services and taxes. Published each month by the second working Fridays.
Often, this index is also called the wholesale price index, as since its inception and until 1978 he was named Wholesales Price Index (WPI). In England, and today it is published under that name.
RRI index used by analysts as an indicator of future inflation. Typically, the markets for the emergence of the index does not react, but its growth may decline in stock prices and credit growth yield instruments and money markets.
Consumer Price Index - CPI (consumer price index).
Consumer price index estimates the average change in retail prices of a fixed basket of consumer, except for changes in prices for new products and services. Includes imported goods, services and taxes. The growth of this indicator reflects the rise in inflation and, consequently, causes a short-term weakening of the currency. CPI is often used as an indicator of inflation and to anticipate price movements. Published each month on the third working week (Tuesday or Thursday).
In England, the index is called the RPI. Ranges from -0.5% to +0.5%.
CPI index growth entails a decline in stock prices in the stock market, and increase rates in the credit market, devaluation of national currency in the foreign exchange market.Official interest rates:
discount rate - official discount rate (ODR) - rate, under which the Central Bank lends to commercial banks (in the UK - base rate).
Repo rate - rate at which the Central Bank lends to KB on securities (government treasury bills).
Lombard rate - the rate at which the Central Bank lends to CB Mortgage or reserves.
Unemployment Rate (percentage of unemployed among the working population, in%)
Unemployment Rate is determined by a poll of 60,000 households and 375,000 businesses. Used as an indicator of possible inflationary pressures through wage increases. This is one of the basic macroeconomic indicators. It is assumed that the low unemployment wages rise faster than at high, especially if the expected inflation rate. Published the first working Friday of every month.
Nonfarm PAYROLLS (number of employees, defined by the payroll, except for agricultural workers);
Average Hourly Earnings (average hourly pay in USD);
Average Workweek (a mean duration of the working week in hours);
Employment Cost Index (index of wages, in%).
These indicators of fundamental analysis is used as a decisive argument in determining the level of inflation, and hence the possibility of changing the lending interest rates.
Money supply
The value of money is important as the goal of economic policy in conjunction with nominal GDP. The effects of money growth on prices and output depend on the velocity of money.
For economists, monetary aggregate is still an important macroeconomic parameters, a sharp increase which could lead to a jump in inflation, and hence to an increase in interest rates and falling stock prices. The quantity of money shall be published in the last working Friday of every month.GROUP 2:
Industrial Production (light industrial)
This display shows the total amount of utilities, the total national output of factories, mines, etc. Reflects the strength of the economy, and hence the strength of the stock market and currency. If you increase this figure rising exchange rate and stock market. To stimulate the production of the Central Bank may be willing to drop the discount rate, which may weaken in the short term rate. Indicator of industrial production is published monthly
Capacity Utilization (capacity utilization), "Optim. - 81.5%.
Capacity Utilization - is the ratio of total output to total capacity. This indicator describes the current state of the economy. For example, the lack of industrial capacity utilization indicates a weak state of the economy.
For this indicator there is an optimal value - 81.5%. The value of more than 85% more likely showing the "superheated" state of the economy than about their welfare. If this parameter is less than optimal, then it indicates a weak economy and may lead to a weakening currency.
Capacity Utilization Index is published monthly.
National Association Of Purchasing Managers - NAPM (National Association for the index managers in wholesale purchases)
NAPM index includes data such as orders, production, employment, inventories, delivery times, prices of exports and imports.
The overall index is calculated by weighing the five indices:
Orders -30%;
Products - 25%;
employment - 20%;
Delivery - 15%;
inventories - 10%.
These indices are determined for each of these categories with a value of more than 50%, reflecting an increase from the previous month and below 50%, reflecting lower compared to the previous month. The overall index is calculated based on a survey 4,000 companies. The index value of more than 50% said about the rise of production, less than 50% - about a recession. Published on the first working day of the month.
NAPM index growth rate increases. During the period of inflationary concerns the price of supplies from vendors often define the market response to economic processes. NAPM is one of the first comprehensive economic characteristics of the month.
Factory orders (orders for factory goods).
Factory orders show the need for industrial products in active use. Increasing the value of this indicator characterizes the activity of production and its possible growth, since a reduction talks about decommissioning. With an increase in this index rate increases and decreases - is falling.
Factory orders index published monthly.
Durable Goods Orders (orders for durable goods).
This indicator indicates the need for products with a term of more than 3 years. Typically, this is big ticket items, so the figure reflects not only the expectations of consumers, but also their ability to spend large sums of money. Durable Goods Orders is a measure of consumer confidence, with its increasing rate is increasing. The growth of this index is positive measure of the state of the economy and production, so it helps to enhance the increase of currency and stock market, and falling, in turn, weakens the currency, and can reduce the stock market.
Durable Goods Orders Index is published monthly.
Retail Sales (retail).
Retail Sales index characterizes the strength of consumer demand. If this figure is growing, it means stronger economy produces more goods, the currency becomes more expensive. Especially important for America, because focus of its economy is aimed at consumers.
Consumer Confidence (consumer sentiment).
This household survey designed to assess individual propensity for spending. This indicator is not used as a trading signal.
Car Sales (selling cars).
Not used as a trading signal.
Business Inventories (stocks at wholesalers).
This indicator includes all manufactured and stored in the warehouses of goods. Its growth shows weak sales of goods. Overstock warehouse negatively characterizes the state of the economy and leads to a weakening currency. What this indicator is higher, the worse for currencies. Has seasonal variations. Published monthly.Indicators of Construction
Construction - one of the major components of GDP. The development of the construction industry is a sign of a healthy economy.
Construction indicators are sensitive to interest rates, as the construction of a very important role credit. Also, this industry is substantial depending on the level of income, so the increased activity in the construction industry is only possible with a good state of the economy. This is accompanied by the strengthening of the currency and stock market growth. The downturn in the construction industry may be one of the first alarm of an unfavorable economy, while there is a weakening currency, and, perhaps, the stock market drop.
Housing Starts and Permits (permit and start construction);
New and Existing Home Sales (sale of the old and new housing);
Construction Spending (construction costs).
In the analysis of these indicators should take into account the seasonal cycles in the construction.
There are optimum values for the indicator Housing Starts and Permits. If its value is between 1.5 million and 2 million, it means a prosperous state of the economy. The decrease of this indicator suggests possible difficulties in the economy. Published monthly.
Leading Indicators Index - the index of the main indicators.
Index of the main indicators derived from the combination of key economic indicators with different weights. Ie He serves indicator of overall economy. Increase its value tells the improvement of the economy and leads to higher exchange rates and stock market. Based on this indicator may long-term forecasting the direction of economic development. Published monthly.
Personal Income - Personal income.
Aggregate income from all sources, including wages, rental income, government subsidies, dividend income and other personal per capita income is a secondary indicator of future consumer demand. Recessions usually occur when consumers stop spending money. With an increase in this indicator is an increase in stock prices, the increase in the degree of profitability of securities, the growth of the exchange rate.
Published in the latest work on Friday.
Personal Income is considered in conjunction with another index - Personal Spend, which reflects the personal consumption expenditure on services and durable goods and nondurable. With the growth rate observed in PS increase in profitability of the credit market instruments, foreign currency appreciation, increasing shares in the price.Group 3:
forward rates of the currencies;
futures rates;
stock indices (NIKKEY, DJ, DAX, FTSE);
Prices of government bonds (T-bills, T-bonds).
Information on the news of the economy published in the economic calendar.
Forecast (FRC) - the expected value (the aggregate opinion of analysts).
Previous (PRV) - the previous value.
Actual, Real (ACT) - the price, which is published as an official value.