Fundamentals are the facts that change what an asset is worth: company profits, interest rates, inflation, employment. When new data is released, markets reprice within seconds.
What matters is not whether a number is good or bad, but whether it is better or worse than expected.
Listed companies report results every quarter. Analysts publish forecasts beforehand, so the share price already reflects an expectation. The surprise is what moves it.
Central banks set the base cost of borrowing. When rates rise, loans cost more, company profits come under pressure and safer options like savings and bonds pay more, so money tends to leave riskier assets.
Currencies respond too. Higher rates often strengthen a currency.
Inflation is the rate at which prices rise. High inflation pushes central banks to raise rates, so markets react strongly to every inflation report, often more to the surprise than to the level.
When fear rises, during a crisis, a conflict or a sudden crash, investors sell risky assets and move into safe havens: gold, government bonds and currencies such as the US dollar, Swiss franc and Japanese yen.
These moves can be fast and large.
Check the economic calendar before you trade, so you know when these numbers land.
