The political and economic situation of nations influences market players’ purchase or sale of a currency, thus affecting its demand and supply. The ideal situation is to buy the currency which country’s fundamentals are strong. Applying this knowledge to currency pairs (ex. GBPJPY), one would buy a pair which base currency (GBP) has stronger fundamentals than the quote currency (JPY). Studying fundamental data on a weekly basis allows for reassessment of a currency pair in which there is desire to trade.
Economic calendars provide the fundamental data required to assess the fundamental data required to assess the fundamental strength of currencies in a currency pair. This data is used to determine the Currency Strength or Weakness ratio (CSOWR, pronounce ‘sour”). In short, the CSOWR is used to determine a currency’s strength or weakness.
Key reports used to input data into the CSOWR are:
- Central bank interest rate
- Gross Domestic Product…
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