FX Growth Fundamental analysis
How interest rates, inflation, jobs data and central banks drive currency values.
What it is
Fundamental analysis studies the economic health of a country to judge whether its currency should rise or fall over time.
Key drivers
Interest rates are the biggest driver: higher rates tend to attract capital and strengthen a currency. Central banks such as the Fed, ECB and Bank of England set them.
Inflation (CPI), employment (e.g. US Non-Farm Payrolls), GDP growth, retail sales and PMI surveys all shape expectations of future rate decisions.
The economic calendar
Traders follow an economic calendar listing release times and forecasts. Prices often move sharply when the actual figure differs from the forecast.
Geopolitics, elections and risk sentiment (risk-on vs risk-off) also matter — in fear, money often flows into the USD, JPY and CHF.
Key takeaways
- Rates and rate expectations move currencies most.
- Surprises versus forecasts cause the big moves.
- Check the calendar before every session.