Fundamentals and their effect on forex

Hi

Although I do not see myself as likely to be a fundamental trader I think it is important in broadening my knowlege base to understand why currencys go up and down. Does anyone have a link to a site with good yet simple to follow information on this.


Many thanks
Max

Its a shame there have been no replies to this, perhaps the question was too general? It would be really useful for all of us rookies to have an idea of how the fundamental side of trading works. It looks like I'll have to do that economics degree after all!

max

Won't hurt to do some economics research and learn a bit about it as most likely you wouldn't quite understand the explanation unless you have some general understanding of the field anyway.
Not a slam on you; but a general observation on those who want to run before they a can crawl.
PS: ON getting started:
Go to the library and see if they have:
Economics: An Introduction

Part I: Overview and Microeconomics
Part II: Macroeconomics and Conclusion
An Audio Economics Course
Taught by Timothy Taylor, University of Minnesota
Published by The Teaching Company
20 Lectures

Also check to see if they have:
On the wealth of nations [sound recording] O'Rourke, P. J.

Great for listening too during the long commute to work.

Thanks I'll see if I can get hold of them. The reason for my post is that I don't want to run before I can walk. I think that to be succesful I probably need to have a broad range of knowlege and an area that I can specialise in. The effects of NFP, political moves ,interest rates, Stock moves etc would compliment my learning.

Every day I watch currencys move up and down like a YoYo. - It would be interesting to have an idea why!

Thanks

max

Fundamentals don't effect your average daily currency move. Sometimes when big news comes out there'll be a minor repricing, but only a few major things (trade balance, budget deficit, monetary policy [interest rates and other fed reserve stuff] and economic policy [w/ various economic stats and indicators]) actually effects major currency cycles.

the two key variables are inflation and economic growth

economic growth: look at retail sales, employment, housing, consumer confidence, business confidence, industrial production, government surplus/deficit, gross national product.

inflation: look at wages, unemployment, exchange rate, commodity prices, input prices, capacity utilisation.

compare the figures with 3 months ago and give them a mark each if they have gone up or down

at the end of the exercise you`ll have an idea if to get in the market (long or short) or stay out of the market if the fundamentals are confusing.

bloody hell. yeah. I was hoping to find not reinvent the wheel on this topic, but looks like I have to? LOL.

Check out this book. The title's cheesy as anything, but content's decent.
http://books.google.com.sg/books?id=...page&q&f=false

May I chime in my 2pips. 1stly, I think it's style dependent.
If you're a scalper, fundis dont matter.
My psych type and rather OCD-thinking tendencies have shown to me that I'm a terrible multi-tasker but very good with detail and big picture stuff.

I am neigh pure technical, but the above has pushed me towards position trading which is more long term... and alot alot less stressful (not to mention profitable). For that, I want to know fundies. (I've cut down to Fiber only)

There is no "outright" fundi stuff? It's rather relative since it's ccy vs ccy.
Eg: US PMI data has been reaally good lately, as has unemployment data. Euro on the other hand is more concerned with Greece flopping over and dying. So the actual econ data has not been regarded much in particular.

Eg: NFP -ve. price goes mad (for 15mins. lol). BBAAD? maybe, maybe not.
how bad is the -ve? if the RATE of job losses is slowing and ISM data (both) is improving, it's actually a GOOD sign. Cause it means more pple are being retained (losing less jobs).

Also, it's how the market has been reacting to "good/bad news".
What about the other ccy economic data? =)

I can't say veeery much more than that as I've only recently begun my research into economics. But what I can say is that I am doing it because I know from dudes in e banks that their big boys watch the econ numbers in a certain manner... so I'd want to know how they think as well. I'm just looking to hitch a ride.

Fingers tired. =P

Read this:

http://www.forexfactory.com/showthread.php?t=216097

heh, just look on fridays, and see fundamentals in action.

My thanks Eagle. Related to this very very much.


LOL. Like TA, I see there're a billion definitions of fundies.

hi i'm newbie.. here... actually is how many % fundemental will affect forex?

Forget about it....it is all smoke and mirrors...I spent to many time trying to "hack" the fundamental analysis, and I realized it is a huge waste of time...why do you think that you could make some use of FA when goverments feed us with crap.....the numbers they proccess to public actualy has nothing to do with reality.
There is a bunch of realy good FA analyst around....their own calculations
based on "real world info" aka GDP, employment, inflation, etc. will always differ from reality...

...something like this;

Alan Abelson, in his column in Barron’s, notes that the $9.1 billion drop in Consumer Installment Debt makes it four months in-a-row that this debt balance went down, and that “Credit card use (so-called revolving debt) shrank by $7.4 billion, extending its string of monthly declines to 20.”

.........next terrifying revelation, which was that “April’s reported increase of $954.8 million, it turns out, was slightly exaggerated and duly revised to a drop of $14.9 billion.” Hahaha!

The facts are that this was an error of $15.8 billion on an original estimate of less than $1 billion, which produces an error rate of 1,605%! LOL!!!!!

Even if you know the truth, that doesnt mean that market will react the way it should......

FA can be usefull to some degree, taken that you plan to use it on a realy long term investments where price could realy "correct" itself to its REAL VALUE....or at least close to it,.......taken that the goverment plans dont differ from truth(LOL)..... bubble will implode sooner or later, but will you survive long enough to profit from it!??

Regards