Fundamental Analysis

There are two commonly accepted methodologies to trade the FX market, fundamental analysis and technical analysis. Technical analysis involves looking at past price patterns and technical indicators based on this past price history, to determine the future direction of a currency. Fundamental analysis, on the other hand, involves examining economic data, such as yield curves, unemployment rates etc. to draw conclusions on the future strength of a currency.

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Fundamental Analysis Articles

Important Events This Week June 17-21 // 17 June 2013

A number of important CPI and PPI data, plus interest rate decisions will come from North America and Europe this week. Check out the details here. Read more >>

Important Events This Week June 3-7 // 03 June 2013

Find out what's happening this week in the world's markets. Read more >>

Important Events This Week May 13-17 // 14 May 2013

This week features a number of important announcements, particularly that of GDP and CPI data of several countries. Read more >>

What Factors Affect Currency Rates? // 08 May 2013

The values of currencies fluctuate over time. Find out what causes these changes. Read more >>

Important Events This Week Apr 29-May 3 // 29 April 2013

Important announcements are up this week. Check out what these are in this post. Read more >>

How to Win in FX // 24 April 2013

Becoming a successful trader at the fx market requires skill. And as with other types of skills, it is not something that you perfect overnight. Read more >>

The Basics of Fundamental Analysis // 19 April 2013

Find out what fundamental analysis is and how it differs from technical analysis. Read more >>

April 4: The Day That Was // 05 April 2013

While all three central banks--the Bank of Japan, Bank of England, and the European Central Bank (currently at 0.1%, 0.5%, 0.75%, respectively)--announced no changes in their rates, there were bigger things that need a closer inspection. Read more >>

Trading Tips: Trading the EUR/USD // 18 March 2013

Since its introduction in 1989, the currency pair of the euro and the US dollar (EUR/USD), has become one of the most popular pairs among traders of different levels of experience. Find out why it's popular and how you can win by trading the EUR/USD. Read more >>

Index of Commodity Prices Rises Anew // 05 March 2013

Australia’s index of commodity prices rose for the fourth consecutive month in February according to a report by the Reserve Bank of Australia (RBA). The index increased by 2.3 per cent last month, continuing a surge that saw a previous increase of 2.4 per cent in January. This left commodity prices by 7.5 per cent from the recent low in October, but 15.2 per cent lower than the all-time high seen in July 2011. Historically, the current figures are still three times higher than late 2003 numbers at the beginning of the commodity price boom. Read more >>

The RBA and Foreign Exchange Market Intervention // 28 Feb. 2013

Last week, Reserve Bank of Australia (RBA) Governor Glenn Stevens announced that despite the Australian Dollar being "somewhat overvalued", the RBA does not plan to intervene in the foreign exchange market. Stevens said that, "you need to be pretty confident that it is seriously over-valued, or the market is behaving in some quite irrational way, before you would launch large-scale intervention." But why exactly would the RBA want to intervene? We will discuss that in the following paragraphs. Read more >>

FX Strategy Insights // 19 April 2012

John Taylor is the CEO and Chairman of a hedge fund firm called FX Concepts which he founded in 1981. FX Concepts manages currencies and FX exposures for institutional clients through both overlay and absolute return strategies. Read more >>

Big Trouble in Little China // 01 April 2012

Recently China reported a larger than expected trade deficit – the numbers weren’t pretty. Exports grew by only 6.9% compared with 14.3% back in the December quarter while imports grew at 7.7%, down from 20.7% in the December quarter. Read more >>

China’s Rising Wage Costs // 11 March 2012

Recently we discussed with readers some of the issue facing Australia and the lofty AUD FX rate -in particular we highlighted the rising cost of living in Australia. Click here if you need to refresh your memory or missed it. Read more >>

BRL Carnivale // 15 Feb. 2012

The famous celebration of Carnivale in Brazil occurs 40 days before the Christian event of Lent. Hence Carnivale usually takes place around February each year. Read more >>

FX Market Overview // 15 Feb. 2012

There has been so much going on in FX markets of late that we thought this week we would do a brief sum up of some of the major events shaping our FX Strategy at the moment. Read more >>

JPY:CNY // 22 Jan. 2012

For a major piece of news, it passed relatively un-noticed in the world of FX – most likely due to the timing of its release. Over the Christmas - New Year period an important currency deal was announced between Japan and China which in the long term will most likely have significant consequences for FX trade and in the near term has led to a 1.1% bounce in the JPY:CNY pairing. Read more >>

FX basics for starting out in 2012 // 16 Jan. 2012

Here at FX Strategy we’re always excited when people new to currency trading join us – there’s nothing better than new friends. While this article is aimed at our new friends who are on a steep learning curve of all things FX; for our more experienced readers we hope that you will still take the opportunity as you read this at the start of a new year to think about your strategy for FX trading in 2012. Read more >>

USD - the safe haven of last resort…. at least for now // 14 Jan. 2012

So it’s 2012 and a new year but it also feels a lot like late 2008 déjà vu! The markets were hanging on every word out of the multiple meetings in Europe in the lead up to Christmas hoping for some sort of resolution Read more >>

Soro's Solution // 09 Jan. 2012

In December we took a look at the dire predicament Greece is in and pondered what the outcome may be under different scenarios. Read more >>

Pondering a Greek Tragedy // 20 Dec. 2011

With FX markets along with global stock and bond markets showing no let up post the 24 hour “everything will be ok” Eurozone deal, this Friday we take a look at how things may play out if (or is it when??) Greece defaults and what it means for the EUR. Read more >>

FX Strategy for a troubled World // 15 Dec. 2011

We haven’t mentioned Mr Eric Sprott yet in our weekly Friday Fundamentalist take on global FX markets however this week we rectify that. For readers who are unaware of Sprott he is a Canadian Hedge Fund Manager with around $10 Billion in funds under management who has been and continues to be a massive bear on the global economic outlook. Read more >>

EUR/USD – Bill Gross’ View // 06 Dec. 2011

The always readable and affable Bill Gross from Pimco was back this week with an instalment of no less than 3 new articles hitting the web. One which caught our eye here at FX Strategy was titled ‘The Euro may fall – and take the U.S. recovery with it’. Read more >>

Update: All Eyes still on the Euro // 20 Nov. 2011

The bond vigilantes have sharpened their knives since my previous article in October “All Eyes on the Euro”. Yields are reaching dangerous levels and investors are dumping Italian and Spanish bonds while previously untouched triple-A countries including France and Belgium have begun to come under pressure too Read more >>

Update: AUD Parity still under Pressure // 19 Nov. 2011

It appears that the risks for the AUD are to the downside and commentators are tipping that the AUD will break below parity with the USD within days with one well known commentator suggesting a year end target for the AUD of USD$0.96. Read more >>

FX Strategy outside the Euro Mess // 17 Nov. 2011

Obviously all things Euro are front and centre for traders at the moment and rightly so. And hopefully FX Strategy members are profiting handsomely from the volatility – keep an eye on the daily video updates for lots of in depth advice. Read more >>

EURO pairs remain steady after Berlusconi vows to resign // 09 Nov. 2011

Pairs involving the Euro have remained relatively steady following Silvio Berlusconi’s announcement that he is planning to quit once the austerity plans in Italy have been formalised. Markets are taking their time to digest the news with an initial small rally towards the Euro, followed by a pullback in morning trading in Europe today. Read more >>

Parity under Pressure // 05 Nov. 2011

We closely follow the AUD/USD pairing here at FX Strategy as it embodies the risk on/risk off world that we currently live in. Australia’s economy is booming thanks to the mining sector and China’s never ending thirst for everything dug out of the ground. Read more >>

Can a change in Greek Prime Minister really affect the EURO? // 04 Nov. 2011

A historic day in Europe beckons today as it will decided whether the Greek Prime Minister, George Papandreou, will remain in office. Papandreou is facing a confidence vote over his handling of the bailout plan. Failure to endorse his position is in a sense opposition to Greece cooperating with the bailout plan, at least in the short-term. Read more >>

FX Strategy correctly predicts BoJ intervention sending USD/JPY higher // 31 Oct. 2011

As we indicated on the 28th of October in our video on the USD/JPY, intervention from the Bank of Japan (BoJ) sent this pair much higher. As we predicted, the intervention sent this pair up a couple of hundred pips from around the 75.8 mark to the current level of 77.94. Read more >>

Euro cannot accelerate despite Swiss National Bank intervention. // 31 Oct. 2011

As we explained to in our EUR/CHF video a few days ago, the recent gains in the EUR/CHF may not necessarily indicate that there is significant strength in this pair just yet. The reason for this is that most of the buying of this pair has been done at the hands of the Swiss National Bank who has stated that a EUR/CHF rate below 1.2 is not tolerable. Read more >>

Trading the HKD // 08 Oct. 2011

Last month I published an article ( that mentioned renowned Pershing Square hedge fund manager Bill Ackman’s FX strategy for a HKD trade. Read more >>

Friday’s Fun // 30 Sept. 2011

We’ve had a number of new members to FX Strategy in the last few weeks asking questions about trading FX so I thought we would take a step back this Friday from our usual focus and just go through a few fundamental facts regarding FX trading. Read more >>

Friday’s Wrap Up // 25 Sept. 2011

Like Charles Dickens said in his famous novel The Tale of Two Cities, “It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness”. And that is exactly how it would be for many FX traders out there after the last few weeks. Read more >>

House of Cards // 23 Sept. 2011

Global markets are in a tail spin and certain nations such as Greece are on the brink of collapsing like a house of cards, forcing them off the Euro and to establish their own stand alone currency again. Read more >>

Currency Intervention: Risk & Opportunity // 23 Sept. 2011

In my article “Game Changer” ( I discussed the potential for Government funded currency intervention to play havoc with an FX Strategy. And what a difference a couple of weeks makes!! Read more >>

Game Changer // 03 Sept. 2011

Henkel makes an interesting case for the strong European countries (namely Austria, Finland, Germany and the Netherlands) to exit the Euro and to form their own currency. Read more >>

Yankee Doodle Part II // 10 Aug. 2011

It was undoubtedly an interesting time to be in the USA over the last few weeks as the politicians bickered and messed around in Washington as the rest of the world looked on and shook its collective head. Read more >>

Fed to keep interest rates near zero for 2 years // 10 Aug. 2011

Low interest rates in the U.S are nothing new in recent times, however, the Federal Reserve coming out an explicitly stating that rates will remain near zero to mid 2013 is the first time that the Fed has pegged a rate for a defined period. Read more >>

Kiwi Dollars // 08 Aug. 2011

As I mentioned in my previous article I’ve been traveling the last couple of weeks. After my first ever visit to New Zealand I can happily report it is indeed a pleasant country just as the travel brochures would have you believe. Read more >>

Volatility in Fx Markets Weekly Wrap Up 5 August 2011 // 05 Aug. 2011

This week saw some of the most volatile times in asset markets, and in turn foreign exchange, since the Global Financial Crisis a couple of years ago. Read more >>

Aussie Dollars // 21 July 2011

As promised last week, we’re taking a look at the AUD this Friday. As a matter of fact I’m on a bit of a kangaroo hop from Australia, to New Zealand, to the USA over the next few weeks - so in the next few articles we’ll put each currency in turn under the spotlight. Read more >>

US Dollar – Yielding to its Bond Master // 01 July 2011

As the lyrics say in Yazz’s famous song “The Only Way is Up” many an economist would have you believe the same is true of US bond yields. Money printing leads to inflation which leads to higher interest rates they will tell you. Read more >>

China. The Dragon in the Dollar? // 23 June 2011

There have been lots of articles doing the rounds this week about Central Banks diversifying away for the US dollar. Read more >>

Can the US Dollar retain its Reserve Currency Status // 18 June 2011

As markets have gotten increasingly volatile in recent weeks and talk of Global Financial Crisis (GFC) Mark II gets louder once again with a default by Greece being likened to Lehman Brothers collapse in 2008, I ponder whether the safe haven status which the USA enjoyed back in 2008 and 2009 would be repeated a second time around. Read more >>

George Soros’ Famous Trade // 10 June 2011

Last week I pondered Europe’s multitude of troubles and the effects it would have on the Euro currency and further whether this may offer the possibility of a profitable trade in shorting the Euro. Read more >>

Why wouldn’t you short the Euro? // 05 June 2011

As the famous German mathematician Carl Jacobi used to say “Invert, always invert”. And so this week I ponder the somewhat rhetorical question of what’s stopping me from an all out bet against the Euro? Read more >>

Will a Paradigm Shift in Natural Resources lead to a Paradigm Shift in the AUD/USD exchange rate? // 28 May 2011

By: Friday Fundamentalist My inspiration for this week’s article is thanks to Jeremy Gratham’s April 2011 Letter which carried the title “Time to wake up: Days of abundant resources and falling prices are over forever.” Read more >>

Using yield curves as a guide to FX rates // 13 April 2011

In a previous article we looked at how interest rates affect fx rates. If you are not familiar with this concept, you should first review that article before reading on. This article looks at how the yield curve can be used to predict future interest rate trends. Read more >>

What is a foreign exchange rate? // 12 April 2011

The foreign exchange market works a little differently to the stock or commodity markets. Specifically, you cannot look at one currency in isolation to form an exchange rate. You must look at a currency in conjunction with another currency in order to form an exchange rate. Exchange rates are always expressed as a combination of two currencies. Read more >>

How do changes in interest rates affect foreign exchange rates? // 12 April 2011

To answer the question on how interest rates affect foreign exchange rates, you should first refresh yourself on what a foreign exchange rate is. It’s always a combination of two currencies (e.g. USD/AUD or EURO/USD). Read more >>

Understanding currency pairs // 12 April 2011

In a FX transaction, one currency is bought and another sold at the same time, and these two currencies are called a "pair" of currencies or "Cross". Read more >>

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