Academy · Intermediate

Fundamental analysis

Charts show what happened. Rate expectations, growth and inflation explain why, and they are what turns a technical setup into a reason.

  • ✓ 24 lessons
  • ✓ 99 minutes end to end
  • ✓ Free in MarketPro
  • ✓ No sign-up to start reading

Last reviewed by the MarketPro research desk · Editorial policy

Currencies are priced against each other largely on relative interest rate expectations, and those expectations move on data. If the market has already priced two rate cuts this year and inflation then prints above forecast, the currency can rise on what sounds like bad news, because what changed was the expected path of rates rather than the state of the economy. Fundamental analysis is mostly the discipline of tracking what is already priced in.

This category covers how GDP, inflation, employment and PMI figures are constructed and why revisions matter, what a central bank actually controls and how to read a statement and a projection, the yield curve, real against nominal rates, and the risk sentiment measures that decide which currencies are treated as havens.

It complements technical analysis rather than replacing it. The chart says where, the fundamentals say why, and the economic calendar says when.

The 24 lessons in order

  1. What Is Fundamental Analysis Markets do not react to a 3.4% inflation rate. They react to a 3.4% print when 3.1% was expected. Beginner4 min
  2. Fundamental Analysis Vs Technical Analysis A correct fundamental view with no timing attached is how traders spend eleven months being right and still losing money. Beginner4 min
  3. Understanding GDP and Economic Growth GDP is the scoreboard, not the game. By release day most of the number has already been reported in monthly data. Beginner4 min
  4. Inflation and the Consumer Price Index The annual inflation rate can fall 0.7 points in a month when current prices barely moved, because the month it is compared… Beginner4 min
  5. The Role of Central Banks A 25 basis point move changes borrowing costs marginally. A signal that six more are coming changes the price of everything. Beginner4 min
  6. How Interest Rate Decisions Move Currency Markets A currency pair prices the gap between two interest rates, and the gap the market expects matters more than the one that exists… Intermediate4 min
  7. Employment Data and Non-Farm Payrolls Payrolls is a fresh survey rather than a summary of data already published, which is why the reaction is measured in seconds. Intermediate4 min
  8. Reading an Income Statement Profit is an opinion within a framework. Revenue timing and depreciation policy are both decisions, not observations. Beginner4 min
  9. Reading a Balance Sheet A balance sheet always balances. That is arithmetic, not evidence, and it is the residual equity line that carries the… Beginner4 min
  10. Understanding the Cash Flow Statement Profit is calculated under rules. Cash is a bank balance. When the two diverge for two years running, one of them is describing… Intermediate4 min
  11. Earnings Per Share and the P/E Ratio Invert the P/E and it becomes an earnings yield you can hold against a government bond. That is the comparison the ratio is… Beginner4 min
  12. Understanding Profit Margins Operating leverage is why share prices move four times harder than the revenue surprise that caused the move. Intermediate4 min
  13. Dividend Yield and Payout Ratio Screening an index for the highest yields reliably surfaces the companies in the most trouble, because the denominator moves… Intermediate4 min
  14. Market Capitalization Explained Market cap prices the residual claim on a company. Enterprise value prices the company, and the gap between them is the debt. Beginner4 min
  15. Sector and Industry Analysis A number that looks alarming in one industry is unremarkable in the next, which is the whole reason sector comes before ratios. Intermediate4 min
  16. Trade Balance and the Current Account Money that leaves a country to buy goods comes back to buy assets. The composition of that return flow decides whether a deficit… Intermediate4 min
  17. Understanding the Purchasing Managers' Index A manager whose orders rose 1% and one whose orders rose 40% both answer better, and the index counts them identically. Intermediate4 min
  18. Consumer Confidence and Sentiment Indices Confidence surveys measure how people feel. Retail sales measure what they did. The gap between the two can persist for more… Beginner4 min
  19. Reading Retail Sales Data Retail sales are reported before inflation is taken out, so the same headline describes a boom or a stagnation depending on the… Beginner4 min
  20. Housing Market Indicators Housing is where a rate change reaches the real economy first, because the affordability arithmetic is immediate and cannot be… Intermediate4 min
  21. Purchasing Power Parity and Currency Valuation A currency 20% below purchasing power parity is, on average, still 10% below it three to five years later. That is the whole… Advanced4 min
  22. Commodity Prices and Their Ripple Effects Brent fell 75% between 2014 and 2016 and the Canadian dollar lost 27% with it. Commodity prices reach your positions whether or… Intermediate5 min
  23. Quantitative Easing and Quantitative Tightening The last tightening cycle did not end at a balance-sheet target. It ended when the repo rate spiked to 10% and the Fed started… Advanced5 min
  24. Yield Curves and Inversions An inverted curve has preceded most US recessions with lead times from six to twenty-three months. That makes it a regime… Advanced5 min

Guided paths that use these lessons

A path is an ordered run through lessons from several categories, which is how the app sequences them. One path draws on fundamental analysis.

Fundamentals & Macro

GDP, inflation, central banks and the economic data releases that move every market.

10 lessons
Trade · Learn · Earn

Take fundamental analysis with you

All 24 lessons in this category, plus the other 296 in the academy, with a quiz on each one and your place kept. Free on any MarketPro account, in the app or your browser.

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