In spite of the fact that the majority of forex traders have turned away from fundamental analysis in favor of technical analysis this does not mean that fundamental analysis is dead and indeed it remains a very valuable tool in predicting currency movements.
For many years the basis of analysis in foreign currency trading was fundamental analysis but in the past few years this has been increasingly replaced by technical analysis. So,Guest Posting is fundamental analysis for foreign currency trading trading dead?Fundamental analysis is essentially an examination of economic and political events that might affect currency prices and digital will these events are reflected in such things as a country’s published economic policy, growth rates, inflation and unemployment rates. So, by understanding the historic effects of economic and political events on the value of a country’s currency it is possible to predict the effect that present events will have upon the currency today.Like other markets the currency market is affected by both supply and demand which are themselves influenced by economic conditions. In particular, both supply and demand are affected by the strength of the economy (as seen in its gross domestic product, foreign investment and trade balance) and also by interest rates.For the forex trader fundamental analysis means looking at current economic conditions which are reflected in the various indicators like producer price indexes, consumer price indexes, durable goods orders and retail sales which governments release on a regular basis.One main indicator for currency traders are interest rates because changes in interest rates can both strengthening and weakening a currency. For instance, whilst high interest rates might trigger stock market investors to sell in the belief that increasing interest rates will mean higher borrowing costs for companies hitting their share price, those same high interest rates might also strengthen the currency so that it is an attractive currency to trade in.Yet another main set of indicators for the currency trader are international trade indicators. Whenever a country is showing a deficit on its trade balance it is generally seen as an poor sign as money leaving the country to pay for foreign goods and services could well devalue the currency. For the forex trader however fundamental analysis might well indicate that market expectations mean that a trade deficit in some circumstances is not at all bad. For instance, some countries frequently operate with a trade deficit