Fundamental analysis and market moving events

Fundamental analysis can be defined as the study of a country’s economic and financial
performance in order to determine the fair market value and future direction of its currency.
Fundamentals focus on factors that determine exchange rates, such as countries’ economic
health, political stability, and environmental events. A popular way to gauge the health of
a country’s economy is through looking at its economic indicators and data releases, which
is why every trader should be familiar with them and how they influence the value of a currency

Data releases

Data releases on their own are not as important as whether they come out above or below
market expectations. In other words, in addition to knowing the data that will be released, it is
also important to know what the market is expecting the data to come out as. For example,
if unemployment comes out at 5%, lower than the previous month’s data release of 5.1%, this

may seem like good news. However, the market will react negatively to this release if the
expectation was that unemployment would fall to 4.5%. For this reason, you should always
know what the market is expecting in order to evaluate whether the actual data release is a
positive or a negative surprise. You should also note that the more a data release deviates
from expectations, the more it will impact on exchange rates.
In the short term, the market typically reacts to any data release within half an hour from the
time it is announced. After that, exchange rates usually settle and give you a chance to analyse
the longer term implications of the news.

You can follow the day’s major data releases and expected results on the easy-forex financial
calendar, under the research & analysis section of our website.
Now let’s have a look at some major indicators every trader should know and follow.

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