Fundamental Analysis

Fundamental analysis is a technique that attempts to determine a Currency strength by focusing on underlying factors that affect a country's actual business and its future prospects. On a broader scope, you can perform fundamental analysis on economy as a whole. The term simply refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements.

Example for Fundamental Analysis based on Economics Event :

What moves EUR/USD?

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.

What moves USD/JPY?
Besides US economic indicators, there are important data of Japan economy with its indicators:

1. Bank of Japan Monetary Policy Meeting — decides on measures to preserve strength of the currency.
2. Japanese Trade Balance — Japanese imports versus exports.
3. Gross domestic product (GDP) — growth in an economy.
4. Consumer price index (CPI) — a measure of inflation.
5. Industrial production index — a measure of activity in the Japanese manufacturing sector
6. Retail sales — a measure of strength of consumer expenditure.
7. Tankan report — assessment of Japanese business conditions: proportion of "optimistic" businesses to "pessimistic" ones.
8. Unemployment rate

What moves GBP/USD?
All US economic indicators should be watched plus:
1. UK Housing Prices — number one indicator for Pound, UK Housing Prices are primary gauge of inflation in the UK.
2. Bank of England Meeting — provides an outline of monetary policy and changes to currency interest rates.
3. UK Unemployment rate
4. UK Retail Sales