Chapter 9: FX fundamental analysis for traders
Having looked briefly at the scope and potential use of technical analysis of currency markets, it now comes time to consider the underlying fundamentals of this market.
How do we determine exchange rates?
Fundamental analysis attempts to measure the intrinsic or underlying value of a currency and how this intrinsic value may change under certain circumstances. In its practical application, a fundamental analyst forms this opinion by assessing how economic factors — such as inflation, interest rates, balance of payments and many others — have an impact on a theory or combination of theories of exchange rate determination. For information on such fundamental factors, it may be useful to refer to ...