Know your fundamentals part 1
It is no longer news that what drives the financial market is Fundamentals. What exactly is this fundamentals: It is the economic news and what is happening around the world. paying attention to the news is a major factor to a successful trading career. We all know that without the news there will be volatility in the market. It is best to begin learning about the news and know each an every happenings as well as the interpretation.
Key terms to always remember is:
- First identify the cause of the move, using the news sources.; Is it because of an economic announcement, rising in oil prices, etc
- Fundamentals: Identify the overall fundamental picture of that currency. Use the news sources to find out what the central bank is focusing on and which way the currency should be going
- Fair Price: What is the fair price of the currency based on the cause of the move and the fundamentals
- Sentiment: The mood of the market, which is temporary
FUNDAMENTAL CORRELATION
PPI-->CPI(PPI is correlated with CPI): Producer price Index are correlated as a result a high PPI will affect market sentiment towards a higher CPI release
PPI: relates to the cost producers pay to manufacture goods and services while CPI relates to how much these goods and services cost consumers:
RETAIL SALE & GDP: Retail sales and GDP are correlated so if retail sales for specific quarter is very good we can expect a good GDP.
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