Macroeconomic indicators like GDP, the unemployment rate or confidence surveys are economic statistics which show the current behaviour of the economy or how it will behave in the future. Investors use this information for decision making. Among the features to be considered in macroeconomic indicators are their relationship with the economic cycle, the frequency of the data, the importance of any change, the publication calendar or the advance/delay with respect to economic activity.
Fundamental analysis tries to predict the supply and demand for each currency, which will have to take into account the macroeconomic indicators and the political situation in each country. Here are the key points to keep in mind.
Inflation differential
If the inflation differential from one country to another is growing, it means that the first is losing price competitiveness. As a result, exports fall and imports rise as they become cheaper. So, the foreign currency would be bought and the local currency sold. Therefore the local currency would depreciate.
Interest rate differential
High interest rates, compared to other countries can attract investment of foreign capital, especially in the short term. This would cause the local currency to increase in value. If interest rates were lower than in other countries, outflows of funds could lead to the devaluation of the currency.
Political stability
Certain foreign exchange can act as "shelter" at certain times when other countries have an uncertain or unstable situation.
Balance of Trade
The trade deficit implies a higher level of imports than exports, unlike the trade surplus. Therefore, a strong trade deficit will affect the local currency adversely while a trade surplus will do the opposite.
Public Deficit
Excessive public deficit, which may affect the growth of the country, will have negative consequences for its currency.
Gross Domestic Product growth
In principle, higher GDP growth in one country with respect to another, would mean an increase in value of its currency since it would imply higher consumption and investment. However, we would also have to weigh up how this growth would affect other variables such as inflation.
ForexMotion offers a weekly calendar of macroeconomic indicator related publications, news and reports. There are also files on the major market indicators. You will soon be able to access the training guides.
Macroeconomic Analysis 
