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For some who see fundamental analysis as irrelevant, it is worth reflecting why nearly every single institutional trading firm invests large sums of money to get economic releases and analysis delivered to their trading desks within seconds.

Fundamental Analysis and Economic Indicators

Fundamental analysis is the study of how economy of the country affects its currency rate, which mainly involves interpretation of statistical reports and economic indicators. Hundreds of economic news and reports released daily allow, to some extent, to predict whether the currency value will appreciate or depreciate in future and when reversal of the current trend may be expected. So traders will focus on some important economic indicators and on what they tell about future monetary policy, which including:

Interest Rates--All central banks have a mandate of achieving an inflation target and in some cases, helping the economy to reach full employment. Based on these targets, the central banks look at the main economic indicators and assess whether to increase, cut or hold interest rates steady.

Inflation--In the Forex market calendar, inflation is the Consumer Price Index (CPI). The higher the inflation, the higher the interest rates will be. The opposite is true as well. Therefore, volatility is at its most elevated levels when inflation differs from the forecast.

Jobs data--In the United States,