Roughly speaking, fundamental analysis is divided into two:

1. Monetary Policy (Monetary Policy)

2. Sentiment

Monetary policy of a central bank is to ensure

a country's economy is operating at optimum levels

established inflation and maximum employment rate.

Monetary policy is divided into 2

1. expansionary (easing)

2. Contractionary (Tightening)

Nie expansionary central bank meant to boost the

economy by promoting business activities in the state

cheap credit and setrusnya add jobs when

growing economic sector. This in turn increases the ability

expenses.

Contractionary nie pulak is intended to slow down the rate

inflation and economic control by controlling the granting of credit ..

-----------

Basically, what you do is control the central bank money supply

in economics. There are four methods used are:

1. Interest rate

2. Quantitative Easing

3. tapering

4. Intervention

Interest Rate - This is the main weapon of the central bank - Interest rate

will determine whether lending or turnover rate

in an economy is cheap or expensive - a normal reaction to

interest rate: if increased, the currency will be stronger. When down, the currency

will be weak.

Quantitative Easing (QE) - basically, nie QE central banks will print money

electronically to buy bonds - QE will add money supply and

allows owners of bonds (government / bank / large) involved

in more economic activities - increased money supply, exchange

down - the central bank has a number of monthly currency "printable

electronically "to QE. For example, the Bank of Japan: Y80 Trillion

a month

Tapering - when the economy reaches its target inflation, GDP, employment,

wage and so on through the process of QE, the central bank will cut

the amount allocated. This is tapering. Currency amount to QE

may be cut off bit by bit depending on the data

economy

------------------

Intervention se metio a hacer trading, This is the most direct weapon in the central
bank

currency. The Central Bank will enter the market and direct exchange mebeli

for the stability of the currency. - There are two famous central bank

with the intervention of the Swiss National Bank (SNB) and the Bank of Japan

(BoJ).

- The SNB will normally intervene in the market when the CHF was

too expensive in view. Two pair is the target:

EURCHF and USDCHF

Sentiment is the "mood" market. Let market as a person ..

each time, this person sees various objects and through various

in many different atmosphere .. As a result of the input, or

Combine several input received by this person, would form

mood.

Input received market consists of:

1. Economic release

2. Data market (the price of a commodity, bond, stock, etc.)

3. Announcement of fiscal policy

4. Politics

5. War

6. Natural disasters

7. Etc.

---------------------------

Sentiment was divided into short term, medium term and long term

depending on market sentiment and the data received

market.

Sentiment can affect only one currency, or 2-3

currencies, or affect the market as a whole

depending on the input.

When there is data affecting the market widely,

market will react by reducing or risk-taking. this

is because the market basically has two properties: greed and fear

(Greed and fear).

When the positive market sentiment, the feelings that dominate the market
is greed.

Greed - maximizing returns (risk on)

1. Purchase of securities risk, equity

2. Carry trade activity, namely the purchase of currency that has the

Higher interest (NZD, AUD)

Fear - more activities to protect funds (risk aversion, risk off)

1. Purchase of secured securities, bond

2. Safe haven flows: the withdrawal of funds from securities and risk

included in the CCY is considered stable

a. Yen: Japan most investors to invest abroad. when

off sentiment, funds plowed back into the investor's account in Japan.

------------------------
------------------------

So, we will see:

1. The major trends MACRO: monetary policy based on economic cycle 2. mid term

trend: the strong sentiment 3. The short term trend is: the current sentiment

market

1. True Monetory Policy & Current Trends

Central Bank: analyze economic data to determine the cycle

economic and monetary policy

Thus, the monetary policy by the central bank reflect changed

real trend of currency

The best reference for monetary policy are:

http://www.jarrattdavis.com/blog/

http://www.centralbanknews.info

2. MARKET SENTIMENT AND PRICE MOVEMENT

Economic data moves price
A must have bookmark is: http://www.forexfactory.com/
Monitor Market Sentiment for Risk Off Risk On
http://money.cnn.com/data/fear-and-greed/
http://www.investing.com/indices/volatility-s-p-500
https://www.dukascopy.com/swiss/english/marketwatch/sentiment/
http://fxtrade.oanda.com/analysis/forex-order-book
http://www.forexlive.com/

-----------------

Basically, market sentiment is divided into two:

1. Risk Tolerance / Risk On / Bullish sentiment
2. Risk Aversion / Risk Off / Bearish sentiment
As retail traders speculating on a volatile and liquid forex spot market,
market sentiment plays a big role in our trading decision. Combining
sentiment analysis with fundamental analysis and technical analysis will
increase ones conviction on his/her trade entry.
Market sentiments are formed by:
1. Economic data release
2. Intermarket factors
3. Geopolitical factors
4. Natural disaster
5. And many other things.. Even rumours!
In this note, we will look at market session sentiment, the underlying
sentiment that moves the market during one or two sessions. We will
combine sentiment with the concept of money flow (where trading funds
move).

-----------

Risk ON
Investors engage in higher-risk investments during perceived low
financial risk period
Equity Market
- Rise in equity index
Bond Market
- Bonds price fall
- Increase in bond yield
- Tighter yield spread between different maturity bonds
Forex
- Carry trade appeal

- Funding of trade from low interest rates funds in Japan and Switzerland
- Inflow of fund to high yielding currencies (New Zealand 2.50% and
Australia 2.00%)
Credit Default Swap (CDS)
- Lower premium for CDS
VIX Index
- Lower reading (Below 20: complacent market. 20-30: Neutral. Above
30: market uncertainty)
CNN Fear & Greed Index
- Higher Reading than Previous

-----------

Risk OFF
Investors engage in lower-risk investments during perceived high
financial risk period
Equity Market
- Drop in equity index
Bond Market

- Bonds price increase

- Lower bond yield
- Higher yield spread between different maturity bonds
Forex
- Flight to safety
- Flow of fund back to cash positions in Japan and Switzerland
- Outflow of fund from high yielding currencies (New Zealand 2.50% and
Australia 2.00%)
Credit Default Swap (CDS)
- Higher premium for CDS
VIX Index
- Higher reading (Below 20: complacent market. 20-30: Neutral. Above
30: market uncertainty)
CNN Fear & Greed Index
- Lower reading than Previous

----------------------

1. What is Bond?
https://www.youtube.com/watch?v=cWzgk-8QHKk
2. The Components of Bond
https://www.youtube.com/watch?v=KQ2bfwHMrnM
3. How to value Bond and Yield to maturity?
https://www.youtube.com/watch?v=pfhjJ00IuW4
4.What is Financial Risk?
https://www.youtube.com/watch?v=-4mXnFK0ecM
5. What is Inflation?
https://www.youtube.com/watch?v=edJPodRQ7Z06.
6. What is the S&P rating?
https://www.youtube.com/watch?v=cZAVGwTKEAQ
7.What is the Yield Curve?
https://www.youtube.com/watch?v=mXiwY_e4nC0
8. How to use Bond calculator?
https://www.youtube.com/watch?v=WUjKbmEY_Oo

------------

Markets Relationship
Australia is a big producer of raw materials and
tends to benefit from commodity upcycles. AUD
Metals and Australian dollar
tends to appreciate relative to other currencies in
Australian and New Zealand dollar
such cycles. New Zealands economy is closely
coupled to that of its northern neighbor.
Canada is a major oil exporter and its economy is
tied to the commodity cycle. The FTSE-100 share
Crude oil and Canadian dollar
index is heavily weighted in mining and commodity
FTSE-100 and copper
stocks and tends to suffer when commodities are
weak.
Japanese yen and commodities Japan is a net importer of raw materials and its

Industrial base metals and global
interest rates
Crude oil and copper prices
Stocks and bond prices
Bonds and commodities
AUD, NZD, CAD and interest rates
industries are sensitive to these cost. Rising
commodity prices tends to be negative for the yen.
Rising raw material costs often portend rising
inflation, and as such higher global interest rates.
Oil and industrial metals are correlated
Stock prices and bond prices tend to move
together. For example the S&P 500 and the 30Y US
treasury bond. According to Murphy this
relationship reverses in a deflationary environment.
When commodities rise bond prices tend to fall
because rising commodities are a leading indicator
of inflation. When commodities fall bond prices tend
to rise.
Global interest rates rise in commodity upcycles
which is a positive factor for AUD and NZD

If Then Why

During times of economic unrest,

investors tend to dump the dollar
in favor of gold. Unlike other
assets, gold maintains its
Gold USD intrinsic value.

Australia is the third biggest gold

producer in the world, sailing out
Gold AUD/USD about $5 billion worth a year.

New Zealand (rank 25) is also a

Gold NZD/USD large producer of gold.

25% of Switzerlands reserves

are backed by gold. As gold
prices goes up, the pair moves
Gold USD/CHF down (CHF is bought).

Canada is the 5th largest

producer of gold in the world. As
gold price goes up, the pair
tends to move down (CAD is
Gold USD/CAD bought).
 Canada is one of the top oil
producers in the world. It exports
around 2 million barrels of oil a
day to the U.S. As oil prices goes
Oil USD/CAD up, the pair moves down.

Since both gold and euro are

considered anti-dollars, if the
price of gold goes up, EUR/USD
Gold EUR/USD may go up as well.

An economy that offer higher

returns on its bonds attract more
Bond yields Local Currency
investments. This makes its local
currency more attractive than
that of another economy offering
lower returns on its bonds.

The performance of the U.S.

economy is closely tied with
Dow Nikkei Japan.

Investors consider the yen as a

safe-haven and tend to seek it
during periods of economic
Nikkei USD/JPY distress.