Grasping the Fundamentals of Currency Rates

Knowing the fundamental drivers of currency rates is the foundation of understanding price movements. This is very important to understand if you want to trade currency as an investment. Here are some suggestions:



  • Get to know the major economic data reports from all the major economies.



  • Understand the importance of expectations versus actual outcomes. Anticipate alternative outcomes to better gauge how the market is really reacting.



  • Stay aware of the pricing in and pricing out of market expectations that occurs in advance of data and events.



  • Factor incoming data and news into the major fundamental themes of interest-rate expectations, economic-growth prospects, inflation, and structural developments.



  • Be aware that technical and position-related themes can overwhelm the fundamentals.






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Source:http://www.dummies.com/how-to/content/grasping-the-fundamentals-of-currency-rates.html

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