Forex Fundamental Analysis: Part 3

Following are some of the indicators used by the forex market traders for predicting the profits and loss:

GDP

The economic situation of a nation is provided by the gross domestic product abbreviated as GDP. This value gives the clearest picture of any nation in the world. There is no other indicator as good as GDB that can provide the overall economic activity of a nation. This is basically a sum of everything that is produced within the borders of a country. But there is a major drawback of this indicator. The data provided is not futuristic, but old as it is the indicator of the economic activity of the previous quarter or year. The expert traders come out with their analysis of the available data for GDP and the news channels survey the analyst consensus and overall calculated GDP.

Interest Rates

The most prominent pusher of the currency trend is the interest rate decisions of central banks. The forex market seems quite directional when the central banks are moving in one direction or the other conclusively. However, when they are not clear about the future, the forex market reacts in an uncertain way. In fact, even an expert trader cannot predict the directionality in the market.

An interest rate is the first thing that any borrower asks for when taking a loan. In any country, a central bank is a sole authority to decide a change in the interest rates which ultimately controls the money supply even at the lowest levels, and that is why traders always keep an eye on any decision taken by the central banks. It is crucial to check the changing policies of the central bank as it is a way to determine the industrial production, unemployment, and other related statistics.

An interest rate is the main thing for speculators to determine the effectiveness of a currency as it is a powerful indicator of currency flow and currency flow determines the value of a currency against another currency.

Chapter 13…..Forex Fundamental Analysis: Part 4…..>>>

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