And what is about perspectives? Now we see that when Gross domestic product rises about 3.0% on average, unemployment starts to decrease, other macro data shows an improvement in economic conditions. Prices on commodities start to rise, and this is a first sign of inflation growth. To limit inflation the Fed in medium-term future will have to increase interest rates. This in turn will lead to higher rates on the Bond market and higher rates on deposits that are denominated in US Dollars. It means that the US economy becomes more attractive for investors and they will want to invest here, because here they can earn higher yields with low risk. But to buy any assets, denominated in USD, they need dollars, so they will have to buy dollars first. This means, in turn, that US dollar should become stronger and its rate should increase if the pace of economic recovery will hold or even accelerate. Pipruit: Cool! I can’t even imagine that fundamental analysis is so logical. It’s like math. And will I be able to do it by myself? Commander in Pips: Sure, why not. All you need is full understanding of the economic process, how this or that political event or a new law can affect the economy's pace and about all the important factors and their influence on economy. Later in our course we will cover all necessary components of fundamental analysis. So you will learn how macro data drives Forex rates and why, understand who is the Fed and ECB chairman and why they are economic whales, major fundamental data that shows the economy's health and condition and how to analyze it for making a trading decision. After our course you will be able to argue with those smart guys on CNBC about US Dollar's perspective in the studio directly. Ok, you may not be ready for that, but you will absolutely understand their logic and lines of thought, so you may reasonably agree or disagree with them. But currently just remember that the subject of fundamental analysis is assessment of a country’s economic strength to make decision about the perspective for its currency. P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon. Note: FPA ranks are earned in the battles against scam, not in the classroom.