Depending on the
principles underlying the market research, it can be either technical or
fundamental. The concept of technical analysis is based on the statement that
the relation between demand and supply represented in the price chart is
complied with rules of mathematics. According to the fundamental analysis, the
market is changing under political, economical and financial factors.
Taking that into
account, fundamental analysis evaluates information of economic, financial and
political nature, which directly or indirectly influences the market price
development; in particular, the principal economic indicators of the leading
world economies which can have an impact on the rates of main currencies. GNP,
GDP, inflation rate, unemployment rate, CPI and PPI indexes, commodity and
industrial price index, trade balance and balance of payment are the most
significant indicators.
GNP is the key
indicator for the national economic climate which includes such characteristics
as consumption, investments, government expenditures, export and import. GNP is
in direct proportion to exchange rate: high GNP level indicates good economic
condition and inflow of foreign investments, which in their turn raise demand
for national currency. Prolonged GNP growth can cause inflation to lower which
the interest rate rise is used, as a result demand for currency is growing.
Unemployment
rate demonstrates ratio between able-bodied and unemployed population which
ideally should not exceed the 6% scale. The rise in unemployment level
negatively affects the currency rate - it falls down. Inflation has the similar
effect on the currency rate and can be measured by price growth rate. Herewith
the inflation and unemployment indicators are in inverse proportion.
This analysis
also includes events, important for the policies of different countries:
elections, economical reforms, undertaking of international agreements etc. The
main financial factor which is considered by analysts is the key interest rate
of central banks which determines the total profitability of investments into a
country’s economy. Growth of this indicator generates favorable conditions for
the national currency growth.
Besides, the
national currency rate is influenced by natural disasters, terrorist attacks,
emergency and other force majeure situations.
Fundamental
analysis, considering the difficulty of evaluating numerous indicators in
different countries, is carried out professionally by qualified specialists.
