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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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Fundamental Archives |
Written by Interactive Brokers |
Dec 31 10 15:10 GMT
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Trading has all but dried-up as all but the die-hard investors leave their desks for New Year celebrations. The year has been characterized by two extremes: Fears that the European sovereign debt crisis would drag down the global economy in to a second-wave of recession were soothed as the U.S. economy rebounded strongly. Typically with any recovery comes a reversal of monetary stimulus. Yet since the Federal Reserve has only recently embarked upon a second wave of easing, the prospects for yields in 2011 couldn't be murkier.
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Fundamental Archives |
Written by Interactive Brokers |
Dec 31 10 15:07 GMT
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A call to unity from German Chancellor Angela Merkel in a New Year speech to her nation is helping drive the single European currency higher as 2010 draws to a close. Still, the dollar will end the year higher versus the euro having taken advantage of ongoing sovereign debt crises that have plagued the region. Nevertheless it is the dollar that has once again weakened on the final day of the year on estimates that 2011 will build on the recently-found economic momentum that continues to shape economic data readings.
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Fundamental Archives |
Written by Trade The News |
Dec 31 10 15:04 GMT
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The USD was softer against the major pairs and commodity currencies in thin year-end market conditions. Dealers noted that the absence of most European centers hampered activity and London names were mostly sidelined. Once again Far East sovereign names were cited as USD sellers ahead of the European morning that sent EUR/USD towards the 1.34 handle for two-week highs. The USD/CHF again tested all-time lows at 0.9332 but EUR/CHF was higher by almost 100 pips from its Asian open above the 1.25 area. USD/JPY limps along around the 81.35 level. - The GBP was further aided by Nationwide house price data which came in better than expected
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Fundamental Archives |
Written by Forex.com |
Dec 31 10 11:06 GMT
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It's been an extremely quiet end to the year, as expected. Most European equity markets are either closed or are closing early; hence stocks have moved only a fraction. It looks as though the FTSE 100 won't finish the year above 6,000 as some may have thought. It is trading softly on the last day of the year, but that doesn't take away from its solid 2010 performance when it rose 10 per cent driven by the mining sector. Global stock markets have had a good year and gains are now expected to extend into at least the first half of 2011. Equities are expected to be driven by a strong outlook for global growth and revised expectations for US growth post the extension of the Bush-era tax cuts.
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Fundamental Archives |
Written by Easy Forex |
Dec 31 10 08:03 GMT
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The dollar appears weaker on the last day of 2010 as risk aversion is low, trading is thin and moves are exaggerated. On Thursday data showed Jobless claims surprisingly fell and pending home sales rose in November revealing a healing US economy. Good data spurs investors' risk appetite who seek demand for higher yielding bets weighing on the dollar.
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Fundamental Archives |
Written by Forex.com |
Dec 31 10 06:37 GMT
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The last trading day of 2010 in Asia turned out to be a very quiet one with no real news or data and the US Dollar remaining hobbled against its counterparts. With Japan closed until Tuesday it seems that the New Year festivities may have begun early across Asia as the currency markets suffered from very thinned trading conditions due to lack of participation. Despite the stagnation of the markets, currencies were leaning against the dollar, with the EUR/USD moving about 25 pips to highs just over 1.3310 and GBP/USD reaching 1.5460 briefly. In the USD/JPY the holiday was clearly evident in the pairs 12 pip range for the session.
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Fundamental Archives |
Written by Easy Forex |
Dec 31 10 06:12 GMT
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U.S. Dollar Trading (USD) had a volatile and mixed trading session in thin liquidity with year end flows dominating and often confusing traders. Normal relationships broke down with GBP falling whilst the Euro rallied and the Aussie came under broad profit taking pressure. Weekly Jobless Claims fell below 400k to 388k in promising signs that the US job market was picking up. In US stocks, DJIA -15 points closing at 11569, S&P -2 points closing at 1257 and NASDAQ -4 points closing at 2662.
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Fundamental Archives |
Written by FX Solutions |
Dec 31 10 05:25 GMT
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A very quiet trading session as can be seen from the ranges .... A number of Asian markets were closed ahead of the New Year’s holiday weekend, including Tokyo ..... One of the movers today has been the Swiss Franc which has given back some of its gains from the previous few days ..... Every centre seems to be counting down the minutes before the turn of the year ..... As mentioned before data is on the light side in Europe so I would not expect that much movement later today.
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Fundamental Archives |
Written by FX Solutions |
Dec 31 10 04:02 GMT
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As Asia winds down for 2010 the FX markets are very quiet indeed. Trading is done books are closed and whether 2010 was good or bad traders are now looking ahead to Monday when a new year beckons they have a clean slate, new ideas and maybe new strategies.
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Fundamental Archives |
Written by Forex.com |
Dec 30 10 22:23 GMT
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The USD/JPY pair and U.S. Treasury yields have traditionally had a high correlation, specifically with shorter term rates such as the 2-year Treasury yields seen below. Looking at the correlation this past year (exhibit 1), we can see that there has generally been a strong relationship in 2010 with an average correlation of about 0.83.
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