In Forex trading, Fundamental analysis is the study of economic news events. Forex traders watch economic data very closely, as changes in the health of an economy can effect currency prices. As a rule of thumb, nations with strong economies will experience increased demand for their currency as businesses and individuals raise their level of investments.
Therefore, if an important news event shows economic growth was better than expected, it can lead to Forex traders quickly buying that currency on expectations that the positive data will lead to increase demand of that currency in the future. The opposite is true if results are worse than expectations.
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