In continuing your journey through the world of fundamental analysis, consider the approach taken when outlining the entire fundamental analysis section of this university; a strong emphasis on the US economy followed by a very close look at the following currencies - and the countries that impact their place in the market:
The truth of the matter is that without a game plan attempting to master global economics would exhaust the most brilliant of minds. So, instead, look at it in the following manner: Every currency that you trade is paired with another currency for the purpose of establishing a comparative value. Consider it a battle of economies if you like, but however you choose to look at it, the point is that if trading the GBP/USD you had better know about not only the economic indicators that move the Dollar, but also of the key indicators that move the Pound. The dollar might be gathering strength across the board, but perhaps the Brits just released a Trade Balance report showing an increase in exports. As most economists know, increased exports tend to precede an increased demand for a nation's currency.
The point is to have an eye on both of the economies, or currencies, that you are dealing in. A trader looking at only the economic indicators pertinent to the USD might have assumed that the Dollar would strengthen versus the Pound, as in our example it had been strengthening versus other currencies. But, given the announcement of increased exports in Britain, the dollar may in fact weaken versus the Pound simply as a result of the Pound's reaction to the GBP Trade Balance report. Had a trader been focused solely on the US economy, and solely on US economic indicators, this key fact would have been overlooked
As the Fundamental Analysis section of the university continues you will notice heavy emphasis is placed on the US economy. This is not an issue of pride, but rather is the case because of the position of the US economy globally; few can argue its place as an economic world super-power. Also, note that the Dollar is either the Base or the Cross currency in 7 major pairs:
Traders need to be aware of major economic indicators around the entire globe... no other approach to fundamental analysis is completely sound. That said; push forward with your study of fundamental analysis; begin with the US economy, and then take a look at economics of each currency or region as they are outlined in this university!
JMI Brokers is a Financial Service Provider Company registered, authorized and holds a Principals license from Vanuatu Financial Services Commission (VFSC) as “Dealers in Securities” to carry on the business of dealing in securities under license number 15010
JMI BROKERS LTD is incorporated in St. Vincent & the Grenadines as an International Business Company with the registration number 24975 IBC 2018.
"Securities" means (as from the 2012 amendment) - (a) shares in the share capital of a corporation; or (b) an instrument that creates and acknowledges the indebt - securities that is issued by a corporation or a public office including: (i) debentures; or (ii) debenture stock; or (iii) loan stock; or (iv) bonds; or (v) certifications of deposit; or (c) a right, despite whether or not conferred by warrant, to subscribe for shares or debt securities; or (d) a right under a depositary receipt; or (e) an option to acquire or dispose of any security falling within any other provision of this Act; or (f) a right under a contract for the acquisition or disposal of the relevant securities under which the delivery is to be made at a future date and at a price agreed when the contract is made in accordance with the terms of that contract; or (g) the proceeds of Foreign Exchange; or FOREX (h) the proceeds of precious metals; or (i) the proceeds of commodities.
High Risk Investment Warning: Trading foreign exchange and/or contracts for differences on margin carries a high level of risk, and may not be suitable for all investors. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. Before deciding to trade the products offered by JMI Brokers you should carefully consider your objectives, financial situation, needs and level of experience. You should be aware of all the risks associated with trading on margin. JMI Brokers provides general advice that does not take into account your objectives, financial situation or needs. The content of this Website must not be construed as personal advice. JMI Brokers recommends you seek advice from a separate financial advisor.
All opinions, news, analysis, prices or other information contained on this website are provided as general market commentary and does not constitute investment advice, nor a solicitation or recommendation for you to buy or sell any over-the-counter product or other financial instrument.