Fundamental market analysis
Fundamental analysis assesses how macroeconomics, policy and world events affect the supply of and demand for assets. In the currency market the key triggers are interest rates, inflation, employment and GDP growth. This approach explains the broader reasons behind market moves but does not pinpoint an exact entry, which is why it is often combined with technical analysis on the WOCM platform.
Which indicators move a currency?
| Indicator | What it means | Typical effect on the currency |
|---|---|---|
| Interest rate | The cost of borrowing in a country, set by its central bank | A rate hike usually strengthens the national currency |
| Inflation (CPI) | The pace of price growth for goods and services | High inflation forces the central bank to raise rates, which indirectly affects the currency |
| Employment (e.g. NFP) | The health and stability of the labour market | Strong data and low unemployment support the currency |
| GDP | Total output and the growth rate of the economy | Sustained GDP growth signals a strong economy and strengthens the currency |
| Trade balance | The difference between the value of a country's exports and imports | A surplus (exports exceed imports) supports the exchange rate |
These relationships are not rigid: the market reaction depends largely on the forecasts published in advance by major investment institutions. If the actual figure beats expectations, the asset price usually rises; if it misses, the price usually falls.
Forecast vs. actual
Enter the previous value, the consensus forecast and the actual release: the simulator shows the size of the surprise and the likely initial reaction of the currency. The market rule: what gets traded is the deviation from expectations, not the number itself.
How do central banks influence the market?
Central banks (such as the US Fed, the ECB and the Bank of England) set interest rates, carry out currency interventions and signal the direction of their monetary policy to investors. Financial markets react sharply not only to rate changes themselves but also to the tone of speeches by central bank governors, which is why central bank meetings and press conferences are the most volatile periods in a trader's schedule.
Key central banks
| Bank | Jurisdiction | Meeting frequency | What it affects |
|---|---|---|---|
| Federal Reserve (Fed) | United States | 8 times a year | All USD pairs, gold, US indices |
| European Central Bank (ECB) | Eurozone | 8 times a year | EUR/USD, EUR crosses, European indices |
| Bank of England (BoE) | United Kingdom | 8 times a year | GBP/USD, EUR/GBP, FTSE |
| Bank of Japan (BoJ) | Japan | 8 times a year | USD/JPY, JPY crosses, Nikkei |
| Swiss National Bank (SNB) | Switzerland | 4 times a year | USD/CHF, EUR/CHF |
| Bank of Canada (BoC) | Canada | 8 times a year | USD/CAD, oil (indirectly) |
Rates, inflation and GDP over time
Switch indicators and compare the US, the eurozone and the UK. Hover over a point to read the value.
Interest rate differential
Choose two currencies: the calculator shows the rate differential, which side earns the carry and how this is reflected in the swap. Rates are for reference only.
How to use the economic calendar
- Step 1
Open the calendar in WOCM
Filter events by importance (high / three stars) and by the currency you are interested in.
- Step 2
Study the three values
Previous, forecast (the analysts' consensus) and actual (which appears at the moment of release).
- Step 3
Compare the actual with the forecast
In the seconds after the release, compare the actual figure with what the market expected.
- Step 4
Allow for liquidity
When critical macro data is released, market liquidity drops sharply: spreads may widen temporarily and orders may be filled with slippage.
- Step 5
Pause ±15 minutes
If you trade on the entry-level Standard account with 1:10 leverage and no personal manager, the safest approach is to refrain from opening any positions for 15 minutes before and 15 minutes after a major release.
A typical week in the economic calendar
Filter by currency and importance. The schedule is illustrative: real dates and values are in the WOCM terminal calendar.
What drives gold, oil and indices?
Gold
Real interest rates, the US Dollar Index (DXY), inflation expectations and the overall level of geopolitical tension in the world (demand for safe-haven assets).
Oil and energy
OPEC+ quotas and decisions, US commercial crude inventories, the pace of global industrial demand and conflicts in producing regions.
Stock indices
Earnings seasons of the largest listed companies, the general level of interest rates, liquidity in the financial system and the macroeconomic backdrop. On the Gold account investors receive a diversification strategy across 3 different market types (including indices and commodity CFDs) with stable monthly dividends.
Interactive correlation matrix
Choose two instruments and see the real risk of holding both positions at once. The gap between stated and actual risk is what usually destroys the accounts of traders who "risk only 1% per trade".
How to combine fundamental and technical analysis
Fundamental analysis sets the overall direction (what to buy or sell) and the investment horizon, while technical analysis helps find the optimal price level for entering a position and the levels at which to cap losses on the chart.
For example, if fundamental factors (a rate hike) point to long-term strength in the British pound, the trader waits for a technical pullback in price and looks for confirming candlestick patterns on the WOCM platform near a strong support level.
Quiz: fundamental analysis
Eight questions, each with an explanation of the answer.
Frequently asked questions
No. To get started successfully on the entry-level account it is enough to understand how the key indicators affect prices and to learn how to use the economic calendar.
Trading follows the rule "buy the rumour, sell the fact". If strong data was forecast in advance, the market may have fully priced in those expectations long before the official release. If the actual figure merely matches the forecast without beating it, investors start closing positions en masse to lock in profit, and that is what pushes the price down.
The economic calendar is built into WOCM
Filter by importance and currency, three values for every event and a reminder before each release.
Risk warning. Macroeconomic news releases trigger sharp and erratic price moves. Trading CFDs with leverage during periods of high volatility carries an elevated risk of losing your trading deposit in an instant.