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 Post subject: fundamental analysis
PostPosted: Tue 18. Sep 2018, 23:57 
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A large part of the fundamental analysis is based on macroeconomic data. While some indicators have more impact than others, data reports that surprisingly surprise the market - whether they are nearing expectations or lower, can cause considerable volatility in the markets.

We will begin by identifying key macroeconomic indicators that can drive the market.
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Employment - the pulse of the economy

Perhaps one of the most important indicators of economic health is employment. This is because it affects all aspects of economic activity, from demand to supply.

The unemployment rate shows the percentage of the total unemployed labor force but the one who is actively looking for employment and wants to work. The steady rise in unemployment rates is a manifestation of the deteriorating economic situation in the country, negatively perceived by the financial markets as a signal to retreat from that currency. The market usually concludes that the higher the unemployment rate, the weaker the currency.

Non-Farms

One of the most watched macroeconomic data of modern times is American non-farm payrolls (NFP). NFPs are published every first Friday of the month at approximately 2:30 pm, showing information on newly created jobs in the non-agricultural sector and the unemployment rate for the previous month.

Considering that consumers account for almost 70% of US economic activity, the labor market situation is extremely important for the overall prosperity of the country. Better than expected growth, the NFP indicates that the US labor market is boosted, improves the prospects of the US economy, and often has a positive impact on US dollar and US stocks.

The weaker-than-expected growth of NFP or even job loss may have the opposite effect, the dampening prospects of the US economy and the weakening of the US dollar and US stock. It may also trigger an increase in gold prices if investors search for precious metal as a safe haven.

Inflation - the key to a central bank decision

The main objective of central banks is to promote price stability in the economy. Price stability is measured as a change in inflation, so investors are monitoring inflation as a guideline as regards the future course of central bank policies.

CPI - the consumer price index - is probably the most important indicator of inflation. This is a statistical estimate created using sample prices of representative items whose prices are regularly collected. The CPI simply measures the price of goods and services and is calculated for different categories and categories.

If the CPI is higher than expected, it means that the inflationary pressure is high and the central bank could raise interest rates, which could lead to an increase in the value of the currency.

Generally speaking, central banks are trying to counter the rise in inflation by higher interest rates, which can lead to a strengthening of the currency. The low inflation rate on the other hand is suppressed by lower interest rates, which can lead to weakening of the currency.

GDP - a true picture of the economy

GDP - or Gross Domestic Product - is the broadest indicator of the country's economy and shows the total market value of all products and services created in that year. GDP has an impact on personal finance, investment and job growth. Investors are following the growth of the country or economy to decide whether to adjust the distribution of their assets. They also compare the growth rates of individual countries to decide where the best investment opportunity could be. Such a strategy includes the purchase of shares of companies located in fast growing countries. For example, if you see that GDP is rising rapidly in Germany and the economy is overtaking the others, you can buy CFDs on the basis of DE30 (the main index of the German DAX stock exchange) as it could grow faster than other countries' equity markets.
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Information noise in the markets

Every day, almost every hour, a lot of macroeconomic data is published - swallowing is therefore very easy. As a trader, however, you need to know which messages can affect your open positions and what's really good to follow. At the beginning of your business trip, it is worthwhile to focus on the above three indicators before looking deeper into data such as consumer sentiment, business surveys, or even retail sales.




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