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!
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