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FOREX Fundamental Analysis

FOREX Fundamental Analysis

FOREX Fundamental Analysis (12)

The European Union (EU) was developed as an institutional framework for the construction of a united Europe. The EU consists of 15 member countries; Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, and the United Kingdom.
Even the small investor can find a way to gain from ongoing weakness in the dollar. A weak dollar can produce strong returns, even for individual investors. The euro has jumped about 6 percent against the dollar this year, as the greenback hit a series of record lows versus that young currency. The dollar has also fallen against Japan's yen. That has increased the value of U.S. companies' overseas sales while driving up the cost of imports here.
Few Traders have caught on to perhaps the most profitable low risk currency trading strategy in the world right now – trading the release of reoccurring weekly and monthly economic indicators and also scheduled news conferences and release of monthly minutes of meetings, interest rate announcements and monthly bulletins.
The United Kingdom is the world's fourth largest economy with GDP valued at over USD$1.4Trl in 2001. The economy is very healthy, with low unemployment, expanding output, and resilient consumption. The strength of consumer consumption has in large part been due to a strong housing market, which is currently 16% above the peak in 1988.
The US is the world’s largest economic power, with a roughly $11 trillion GDP. As the world’s largest economy, the US is also the largest trading partner with many of the world’s countries. With the US having the most liquid equity and fixed income markets in the world, foreign investors have consistently increased their purchases of US assets. Foreign direct investments represent approximately 40% of total global net inflows for US. On a net basis, the US absorbs 71% of total foreign savings.
In the opinion column in early October last year, we came to the conclusion that the U.S. dollar might face hard times in the years ahead (Is it the End of U.S. dollar supremacy?). There is now a strong belief that the budding European currency, the euro, will pose a strong threat to the U.S. dollar's supremacy. Another key conclusion of the article is that the U.S.'s recent presidential election might signal a shift in sentiment, which could have global economic repercussions.
Currency worries Fed, affects everything from mortgage rates to retail prices to jobs. Here's how. For most Americans, a record low for the dollar doesn't have the same urgency as soaring oil prices or a big tumble in the stock market.
LONG TERM FUNDAMENTALSFundamentals that determine the long-term strength or weakness in the major currencies include:
To be a successful day trader only a broad-brush knowledge of where a particular currency pair has been is necessary. For example, the EURUSD bottomed out about 2 years ago; from a base of around 0.85, rallied to 1.29, now it’s 121. The long-term trend is up, intermediate trend down, and on Friday it dropped about 0.025 so the short-term trend down.
EXAMPLE 1: The monthly U.S. retail sales number is widely accepted as an important gage of future economic performance. When the August number came in below expectations the U.S. dollar quickly lost 1% of its value. It's reasonable to assume any leading indicator of the general direction of next months (September) retail sales number should also have an impact on the value of the U.S. dollar.
America's bloated trade deficits probably wouldn't be helped by China revamping its currency system as the Bush administration has been pressing Beijing to do, Federal Reserve Chairman Alan Greenspan said Friday.
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