Fundamental analysis in forex broadly investigates how various governments' economic policies influence the currency market. This study is generally more appropriate to the longer time frame.

For the daytrader, daily economic announcements are the only significant fundamental events that could influence your trades. These announcements comprise economic figure releases and speeches by prominent people.

Summary of the important economic announcements.

Generally, announcements relating to the economy of the USA are most important. The top three market moving figure releases are:

• Interest rates
• Trade balance, budget and treasury budget
• Employment situation

The following figures are less important but can be market movers if the figure comes in very different from what was predicted by economists:

• Retail sales
• Durable goods
• GDP (usually the most stable figure)

How to interpret economic calenders

Economic calenders usually list a forecast of the figure (predicted by economists) and the value of the figure released the previous month. If the forecast figure is expected to be better than the previous figure then the US doller generally strengthens against other major currencies and vica versa if the figure is expected to be worse. 

However, it sometimes happens that if we are currently in an environment where the US dollar is presently favoured (a trending environment), a negative figure may cause a temporary drop in the dollars value before it continues to strengthen, i.e. it reverts back to the pre-announcement trend.

Brokers sometimes close their trading desk to new orders in the period directly before an important figure is due to be released in order to limit the high volume of trade which occurs at these times.

Therefore, If you wish to trade a figure release, you may need to place an order timeously and always include a stop loss as you may not be able to access the trade station if you need to close your trade. 

Speeches and policy decisions

When Alan Greenspan, the Chief Banker of the United States, is expected to talk the currencies normally range within a tight range until his speech commences during which time they can move quite substantially, depending on the topic and content of his speech. Other speakers in the USA who can move the market include: Ben Bernake, John Snow and Janet Yellen. 

Policy decisions such as those made at G11 meetings tend to initiate a trend in the currency market which may last a few days or weeks.

How the Oil Price impacts on the currency market

When the price of oil increases the currencies are affected negatively, especially the currencies of countries who need to import oil such as Japan and America.

The influence of geopolitical events

Geopolitical events do not generally move the currency market as much as important economic events do. However, major occurances such as September the 11^th do cause extreme moves. It is therefore necessary to always trade with a stop loss to protect your capital against such unexpected, large movements.