Fundamental analysis aims to validate the effect of various fundamental and macroeconomic developments on currency trading. Fundamentals include macroeconomic factors such is inflation, interest rates, unemployment, GDP, etc.

These are some important Fundamental Indicators.

• What is GDP (Gross Domestic Product)

GDP measures the change of the national income in an economy. GDP incorporates the values of all products and services that were produced during a particular period (usually 3-month or 1-year).

• What is GNP (Gross National Product)

GNP includes GDP plus income gained from investment and overseas work.

• What is Inflation

Inflation is measuring changes in the level of prices. Inflation is often called the hidden tax in an economy as it reduces the purchasing power of consumers. High inflation is bad news for the economy, the stock market, and the domestic currency rate. Inflation is measured on a monthly basis.

• What is the Personal Spending Indicator

A personal spending indicator measures the changes in individual spending in an economy. When personal spending is increased high growth and high inflation are the outcome and vice versa.

• What is Unemployment (%)

Unemployment is a macro-economic indicator that measures the level of the unemployed population in percentage to the total population who is able to work.

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• What is Jobless Claims

Jobless Claims is an economic indicator measuring the number of registered unemployed. Higher Jobless Claims is Bad News for the stock market and the domestic currency rate.

• What is Industrial Production

Industrial production is an index which measures the total output produced by the national plants during a particular period.

• What is Output Index

The output index is the index measuring the production volume output.

• What is PPI (Producer Price Index)

PPI is the index of producer prices. When PPI increases it means ‘bad news’ for the corresponding economy.

• What is the Balance of Trade

Balance of Trade measures the difference between the value of imports and exports of a country for a particular time frame (usually monthly or annually). When the outcome is negative, the Trade Deficit is created and when it is positive, Trade Surplus is achieved.

• What is Currency Appreciation

A currency is appreciated when it earns value against another currency. This may be due to a new fiscal or monetary policy. A monetary policy aiming at domestic currency appreciation is called “a hard-currency policy” and it is usually followed by higher interest rates. The opposite is a “flexible-currency policy”. 

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What is Fundamental Analysis