Page 50 - Ultimate Guide to Currency Trading

Taking this information to the next step, you would then search through your broker's reports
for a mention of the same rate-change direction, and also get the market sentiment of where the
interest rates are going. You could look at news services such as DailyFX and FXstreet for back up of
this information. Remember, you are looking for one interest rate of one currency to move up and the
interest rate of another currency to move down. Some-times the expectation that the currencies will
move interest rates against each other will be enough to be the catalyst of a good FX trade. As long as
the market thinks that the interest rates (and therefore the relative value of each currency against
each other) is about to change, the players in the FX market will place their bets, and the weight of the
world's FX traders will cause the currency pair to move in that direction.

This studying of the world currencies' central bank websites should be the beginning of any
study of the fundamentals of all of the currency pairs you are considering trading. Whether it is the
EUR/NOK, the EUR/SEK, or the EUR/CHF, (or any other combination of any currencies) the European
Central bank website (www.ecb.int/home/html/index.en.html), the Norges Bank (www.norges-
bank.no/en), the Riksbanken (www.riksbank.com), and the Swiss National Bank (www.snb.ch/en)
should be visited and studied. A list of the world's national and central banks can be found on the
Bank for International Settlements (BIS) website (www.bis.org/cbanks.htm). There is plenty of
information at the BIS website, including a good idea of the movement of money among the banks of
the world and reports on inflation (www.bis.org).

The Use of Fundamental Indicators

Once the basics of a country's economy are determined from looking at the central bank website, you
can delve deeper and look at some of the current and future economic indicators. The following is a
list of indicators on the U.S. Economics and Statistics Administration's website (www.esa.doc.gov/
about-economic-indicators).

TABLE 6-1: FUNDAMENTAL INDICATORS

Economic Indicator Website link
Advance Monthly Retail Sales www.census.gov/retail
Advance Report on Durable Goods www.census.gov/manufacturing/m3
Current Account Balance www.bea.gov/newsreleases/international
New Home Sales www.census.govlconst
Personal Income and Spending www.bea.govinewsreleases/nationallpi
U.S. Trade Balance www.bea.gov/international

Current and future economic indicators are a bit more complex to digest and assimilate into
good trading information. Don't allow yourself to get caught up in the numbers. Remember, what you
are looking for is any indication that a country's economy is steady, slowing, or growing too quickly.
After looking at this information and its equivalent on the non-U.S. central bank websites, you can