Any news that has a bearing on the economy, whether directly or indirectly, is considered fundamental. This news may include the changes in the economy, changes to interest rates, political elections, and natural disasters. In order to allow navigation through the changing universe of fundamentals, news is classified into one of four categories: economic factors, financial factors, political factors, and crises.

Not only will economic data differ among counties, but their importance, timing, and dates of release also differ. Economic data usually are scheduled for release in advance, and times and dates of releases arc easily available, at least in the industrialized nations.

Political factors, unlike economic data, vary in terms of dales and times and certainly have a huge impact on foreign exchange market (the FOREX). The US market is more stable than those of other countries because most elections occur every 4 years and new nominations are announced to the public in advance.

In other countries, such as Italy, governments are less stable, and the liming of parliamentary elections cannot be forecasted in advance. To (he extreme side, we can look lo the fall of the Soviet Union, the new future of Iraq, and the political tensions between France and Germany and the United States.

Financial factors are partially timed and predicted. Discount rates are changed by central banks such as the Federal Reserve (Fed) in the United States, the European Central Bank (ECB), and Bank of Japan (BOJ), and although the changes in rates are kept in high secrecy, markets watch closely and make their predictions in advance. While rate changes are mostly unknown in advance, the dates that the central banks meet are available in the financial news.

A crisis may or may not have a huge impact on a country’s currency. Most recently, while Allied forces entered Iraq, the U.S. dollar saw little change as the war started and ended, but the kidnapping of Mikhail Gorbachev, then president of the Soviet Union, had a sharp effect on the FOREX.

ECONOMIC INDICATORS

Economic indicators by far provide the most information of all the fundamental factors. Unlike the financial, political, and crisis factors, economic factors occur in a steady stream, at certain times, and more often. It is extremely important for you to be aware of these economic announcements.

THE GROSS NATIONAL PRODUCT (CNP) AND GROSS DOMESTIC PRODUCT (GDP)
The GNP is said to be the most significant economic indicator, and many analysts agree that it strongly measures economic performance as a whole. GNP is the sum of all goods and services produced by U.S. residents both in the United States and abroad.
On the other hand, the GDP refers to the sum of all goods and services produced in the United States by both domestic and foreign companies. The GDP figures are more popular outside the United States.

CONSUMER SPENDING
Consumer spending is more psychological in nature and measures consumer confidence rather than actual spending. Consumer spending is made possible by personal income and discretionary income, so consumer confidence is important for those who have discretional income in order lo switch 10 buying from saving.

GOVERNMENT SPENDING
Government spending is very important in that its sheer size and impact on the economy are tremendous, but it is also very influential in other ways. Due lo special expenditures such as military spending, it boosts the unemployment rate and GDP and promotes investment spending.

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