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Fundamental analysis refers to the study of the core underlying elements that influence the economy of a particular entity. It is a method of study that attempts to predict price action and market trends by analyzing economic indicators, government policy and societal factors (to name just a few elements) within a business cycle framework. For forex traders, the fundamentals are everything that makes a country tick. From interest rates and central bank policy to natural disasters, the fundamentals are a dynamic mix of distinct plans, erratic behaviors and unforeseen events. Therefore, it is best to get a handle on the most influential contributors to this diverse mix than it is to formulate a comprehensive list of all "The Forex Fundamentals."
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Mar 04 11 15:45 GMT
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The dollar lost ground again this week. EURUSD traded for the most part within quite a narrow range between 1.37 and 1.39. Only after the ECB's rate rise signal, which took many by surprise, did the euro surge to its highest levels of the week, rising to a 4-month high. The yen also regained some ground against the dollar, trading below 83. Reports about the unrest in North Africa and the Middle East had little impact on the forex market - market participants appear to have got used to the uncertain situation in Libya. It is noticeable, however, that when oil prices rise, the dollar tends to fall.
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Weekly Forex Fundamentals |
Written by FXTimes |
Feb 28 11 19:28 GMT
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The past week showed some mixed results for the US economy. We had positive reports in the labor market as jobless claims fell below 400K again and the UMich Consumer Confidence report at 77.5 for the final reading for February was the best in 3 years. At the same time the Conference Board Consumer Confidence reading for February posted a 70.4 from January's 64.8. We know that the sustainability and strength of the US recovery depends on employment improving which would help spur more spending. On the housing front existing home sales also rose more than expected for January posting a 5.36 million annual rate compared to expectations of a climb to 5.27 million from December's 5.22 million.
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Feb 28 11 11:04 GMT
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Nonfarm payrolls went up by a mere 36k in January, much less than the average monthly rise of 137k in Q4, as severe weather conditions hampered activities. The forecasts for February are difficult: after the disappointing figures in January, there could be a rebound, especially as consumers' assessment of the labour market has improved. However, snow storms in most federal states could have had a negative impact again. We forecast that nonfarm payrolls will have increased by about 125k in February. The ADP figures, which are less sensitive to weather conditions, could again show higher job growth of about 175k, which would be close to the latest 3-month average. It should be noted that ADP will release annual revisions to the employment report, which could alter the historical data.
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Feb 28 11 11:03 GMT
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The ECB will probably leave interest rates unchanged at its council meeting on Thursday. However, the council is likely to strike a more hawkish tone by emphasising the upside risks to inflation. The quarterly staff projections, which will be published at the press conference, will probably show an upward revision of the inflation forecast for 2011 to about 2.2% (central value of the range). The forecast for 2012 could be raised to about 1.9%. As bond markets in the euro area have calmed down somewhat and the outlook for growth has improved, risks to growth will probably be judged as broadly balanced.
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Feb 28 11 05:17 GMT
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Following the relatively calm manner with which markets dealt with regime change in Tunisia and Egypt, the spreading revolution in Libya has had a much greater impact. Brent Crude leapt to close to $120/barrel last week from just over $100, before comments from Saudi Arabia and the IEA provided some relief. Financial markets remain nervous, with bond gains suggesting safe-haven flow and shorter term rate markets edging away from aggressive rate profiles in the UK and Eurozone, and easing further in the US. While markets will continue to watch developments across the MENA region, this week sees key international events, including the ECB's endquarter meeting (including forecast updates) and from the US, payrolls and ISM data to distract from the looming threat of government shutdown.
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Weekly Forex Fundamentals |
Written by FXTimes |
Feb 26 11 11:59 GMT
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The ECB is in the middle ground between the BoE and the Fed in terms of growth and inflation. Whereas the BoE is facing high inflation but weak growth, and the Fed is seeing modest growth, but no inflation, the Euro-zone economy seems to be in the goldilocks position of decent growth, but inflation above its target. Therefore ECB members like Mersh and Smaghi have become more hawkish as they try and lay down the groundwork for a rate hike towards the end of this year.
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Weekly Forex Fundamentals |
Written by Wells Fargo Securities |
Feb 26 11 11:54 GMT
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The turmoil in the Middle East took center stage this week. West
Texas Intermediate briefly rose above $100 a barrel, setting off
alarms about the likely implications for near-term economic
growth. Although energy prices are likely to be higher than
previously expected, we believe the worst-case fears should not be
the basis for our forecast or business plans. Without actual supply
disruptions, oil prices should subside, albeit at a higher level than
we previously projected. The rise in energy prices is already
affecting consumer spending, leading to weaker retail sales in
January. The impact will grow this spring, when driving picks up
significantly. We have a more detailed analysis of the impact of
higher energy prices in our Topic of the Week
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Weekly Forex Fundamentals |
Written by Forex.com |
Feb 26 11 11:42 GMT
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The past week saw a decline in the greenback as expectations that the Fed will lag other major central banks in lifting interest rates mounted and as commodities surged amid continued turmoil in the Middle East. Tensions in Libya drove commodities higher led by rising oil prices and saw significant flows into the CHF, JPY, and gold as investors sought safety. CHF reached a record high against the US dollar, USD/JPY approached long term lows, and gold neared record highs against the buck as risk aversion took hold.
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Weekly Forex Fundamentals |
Written by TD Bank Financial Group |
Feb 25 11 19:07 GMT
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Geopolitical risk and its impact on oil prices was the main story this week. Rising gas prices are a tax on U.S. consumers and present a risk to the economic recovery. The economy can handle oil at $100 and prices would have to rise considerably before growth is put in jeopardy.
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Weekly Forex Fundamentals |
Written by TD Bank Financial Group |
Feb 25 11 17:11 GMT
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The past couple of months have demonstrated how geopolitical risks are virtually unforeseeable and how quickly they can impact economic and financial prospects. No one could have predicted that a youth setting himself on fire in protest would bring down the government in Tunisia, or that this event would have a rapid cascading effect on other Middle Eastern countries. As events have unfolded, financial markets have struggled to assess the implications and it has led to a significantly higher geopolitical risk premium in the price of oil.
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