Fundamental...

It is hard to say what has a stronger effect on the market, the event itself or its expectation, but it is safe to say that the release of important data can lead to significant and sustained movement exchange rates.

So, in the framework of of fundamental analysis (FA) Various reports on currency and financial events in the world, phenomena in the political and economic life of individual countries and the world community as a whole, which can affect the development of the currency market, are studied, as well as an analysis of what changes in exchange rates they can lead to. Here important information about the work of stock exchanges and large companies such as market-makersThe main factors that influence the development of the economy are the economic situation in the country, central bank interest rates, the government's economic policy, possible changes in the political life of the country, as well as all kinds of rumors and expectations.

The date and time of release of this or that indicator is known in advance. There are so-called economic indicator calendars and the most important events in the life of individual states (with specific dates, or approximate time of their release). The market prepares for these events. There are expectations and forecasts of what value of this or that indicator may come out and how it can be interpreted.

The following proverbs are related to the release of certain data (or any information that affects the market): "sell on good news" and "buy on rumor, sell on fact". These proverbs are appropriate when the market is waiting for some event to occur.

Even before the release of information about this event the exchange rate moves in a certain direction (the direction of interpretation of the future event), i.e. the market "lays down". Therefore often after the data release (if the information corresponds to expectations) the rate moves in the opposite direction. This is due to the fact that positions were opened on expectations, and when it happens what was expected - the positions are closed. The so called "profit taking" (profit withdrawal). Situations when such events occur are characterized by the expression "priced in" (i.e. the occurrence of this event is already priced in - meaning the exchange rate of one currency against another).

When working with FA is important not only the possible reaction to the news, but also:
- the current state of the market;
- the crowd's anticipation of what news will come out, and the masses' perception of how much the news will change the economic community's view of the current economic situation, and thus the economic situation itself.

For example, after the release of a series of rising GDP indicators, Nonfarm payrollsThe market may see talk of a possible interest rate hike in the U.S., and even if it happens in a few months, people are already actively buying U.S. dollars against other currencies. Even if this change happens in a few months, people are already actively buying U.S. dollars against other currencies. Thus, the beginning of up-trend on the dollar The U.S. dollar is steadily trending stronger against other currencies. After the release of the announcement of the rate change, a correction to this movement may begin.

Contrary to the misconceptions of many beginners the "correct" interpretation of macroeconomic data is often impossible, because even knowing the relationship and mutual influence of currencies in a pair, reflecting the relationship between different states, the history of currency development, determining the cumulative result of certain economic measures and establishing a link between seemingly unrelated events does not guarantee the result. This is where experience in the foreign exchange market is most needed. One thing is certain: you should always know the time of news release and the possible force it can have on the market. If you trade intraday, this knowledge may help you to break through the range or just signal about the timely closing of open positions.