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Fundamental Analysis is the assessment of a business or a whole economy based on data pertaining to that business or economy. For an individual company this would include an analysis of the balance sheet, liabilities, assets, revenues, earnings, profits etc.

For a country’s economy, fundamental (or macroeconomic) analysis would look at and analyse many factors including; GDP, Employment, Inflation, interest rates, production as well as many other data points.

Traders can then use their analysis to derive a valuation about the true fundamental value for a security, asset, commodity or FX rate. The fundamental (or macroeconomic) analyst or trader can then compare this valuation with the current price (of the security, asset, commodity or FX rate) and then make a decision of whether it is overvalued or undervalued, then decide whether to sell or buy.

In this section we will look at fundamental and macroeconomic analysis in more detail. Furthermore, we will deliver articles aimed at developing the readers understanding and use of this this approach. Read more forex trading tips.


Intermediate

Trump names Jay Powell to replace Janet Yellen as Fed chair

Posted on by Stephen Pope

There is a to be change at the top of the Federal Reserve Jerome “Jay” Powell will succeed Janet Yellen in February 2018 He is not that different in his approach to monetary policy He will be more business friendly, especially toward financial services Last week President Trump announced that Jerome “Jay” Powell was his … Continued

Intermediate

In a crowded week, the Spanish situation is critical

Posted on by Stephen Pope

There is a growing crisis in the Kingdom of Spain The Basques and Galicia are also looking to break away Further afield, be wary of mounting tension in Italy and Germany Be under no illusion, this crisis will be far more damaging than Brexit The economic calendar is heavily laden with potentially market-moving data points … Continued

Intermediate

Is now the time for the UK face a rate rise?

Posted on by Stephen Pope

It has been a decade since the UK last saw interest rates rise The economic data points offer a mixed picture Consumer debt is clearly a mounting problem High uncertainty of the economic outlook suggests no change is required The Bank of England (BoE) voted by seven to two to keep the Base Rate at … Continued

Beginner

Weekly Global Recap and Look Ahead to week commencing 16th October

Posted on by Steve Miley

Today we introduce a new weekly feature to FXExplained.co.uk, our Weekly Global Recap and Look Ahead. To ensure that you do not miss out on this overview, or any other of our articles, please sign up to our mailing list here. Global overview Mid-October has seen global stock markets probe higher, as the overall “risk … Continued

Intermediate

Stephen Pope interviewed by Bill Hubard

Posted on by FXexplained

Here we have an interview with FXExplained.co.uk contributor Stephen Pope (also Managing Partner of Spotlight Group PLC) and Trade.com Chief Economist Bill Hubard. They discuss the Fed Meeting Minutes released in early October and its impact on the US bond markets. Furthermore, the lack of follow-through on the fiscal side from the Trump administration. Also, … Continued

Intermediate

The Pain of Spain

Posted on by Stephen Pope

Catalonia has 16% of the Spanish population It makes transfers worth 20% of Spanish GDP A split will see Spanish debt and equities collapse Catalonia may see its GDP decline by 30% The main market development, after Catalan President Carles Puigdemont decided to retreat from pressing the independence button and sought dialogue with Madrid was … Continued

Expert

Economic Efficiency and the Tax Regime

Posted on by Stephen Pope

Tax rates are currently under scrutiny Rates of taxation should be fair, not cut too low nor cast too high Retrospective action should be against loose legislation, not legitimate practice The “Laffer Curve” is a theory developed in 1974 by the “supply-side” economist Arthur Laffer. It sought to demonstrate the relationship between rates of taxation … Continued

Intermediate

A Reality Check For Germany…and Europe

Posted on by Stephen Pope

Federal elections were held in Germany on Sunday, 24 September They elected members of the 19th Bundestag Angela Merkel wins a fourth term She has diminished authority as “AfD” enters Bundestag ECB now faces a dilemma, the Euro is on the backfoot Angela Merkel, the longest serving of all significant world leaders secured a fourth … Continued

Expert

UK economic outlook lacks momentum

Posted on by Stephen Pope

So far, there has been no advantage for the UK to leaving the European Union. Despite a massive decline in Sterling, exports are still struggling. Bank of England is staring at a low growth, high inflation horizon. “…It was the best of times, it was the worst of times, it was the age of wisdom, … Continued

Expert

Treasury Spreads: A Tale of Trump’s Timid Term

Posted on by Stephen Pope

The Fed were planning a succession of rate rises. Data disappointment brings that schedule into doubt. Mixed messages from the Fed are misleading markets. The US yield curve reflects frustration with Trump’s lack of progress. A yield spread refers to the difference between the yields of two fixed income securities. One can compare two similar … Continued

Expert

Sovereign Rating Sheet

Posted on by Steve Miley

A credit rating is the assessment of the credit risk of a potential borrower or debtor. Primarily this focuses on the capacity to make repayment of the debt, and therefore implicitly a prediction of the probability or possibility of the debtor not repaying (or defaulting). Sovereign Debt Ratings are a form of credit rating, but … Continued

Expert

Hawk / Dove Sheet

Posted on by Steve Miley

Here we present the Hawk / Dove sheet, an explanation of the terminology as well as the implications on forex trading and how it is used in fundamental analysis. Hawkish and Dovish Hawkish A Hawk is a term originally used in economics to describe economists or Central Bankers who are more concerned with potential recession … Continued