Even if you’re bad at economics, you’ll understand it clearly! An ultra-introductory guide to fundamentals analysis [Koichirou Ameyo]
Fundamentals (fundamentals) are translated as the basic conditions of the economy and are used as a term to refer to the state of economic activity of a country. This includes indicators such as economic growth rate, employment indicators, and price indices. The analysis of these aims to predict currency price movements, which is fundamental analysis. Introducing it like this may sound difficult, but once you grasp the key points, your view will open up all at once. To make it easy for beginners to understand, Koichiro Amaya will summarize the most important points of fundamentals.
Table of Contents
1. The Good and Bad of Fundamentals
2. Short-Term Fundamentals
3. Ultra-Short-Term Supply and Demand
4. Mid- to Long-Term Fundamentals
5. Ultra-Long-Term Fundamentals
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※ This article is a re-edited version of an article from FX攻略.com, November 2016 issue
Koichiro Amaya (Amaya Kōichirō) Profile
For more than 20 years, he held key foreign exchange positions at major foreign banks such as UBS, JP Morgan, and BNP Paribas. He has a background of ranking highly in the Tokyo foreign exchange market popular trader rankings in the financial trade magazine “EuroMoney.” In 2006, he became a freelance financial analyst, providing currency market information with his own sharp perspective to FX companies and portal sites.
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The Good and Bad of Fundamentals
To forecast exchange rates, it has long been said that technical analysis alone is not enough; fundamentals analysis is indispensable. Despite twists and turns, ultimately, currencies with good fundamentals are bought, and currencies with bad fundamentals are sold.
So what does it mean for fundamentals to be good or bad? It’s hard to express in a single word. In this article, therefore, we divide the forecast horizon into short-term, mid-term, and long-term, and for each, explain what constitutes good fundamentals and what fundamental analysis is required.
