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2 types of analysis are used for the market movements forecasting: fundamental, and technical (the chart study of past behavior of commodity prices). The fundamental one focuses on the theoretical models of exchange rate determination and on the major economic factors and their likelihood of affecting the foreign exchange rates.4.1. Economic FundamentalsTheories of Exchange Rate DeterminationFundamentals may be classified into economic factors, financial factors, political factors, and crises. Economic factors differ from the other three factors in terms of the certainty of their release. The dates and times of economic data release are known well in advance, at least among the industrialized nations. Below are given briefly several known theories of exchange rate determination.Purchasing Power ParityPurchasing power parity states that the price of a well in one country should equal the price of the same well in another country, exchanged at the current rate—the law of one price. There are 2 versions of the purchasing power parity theory: the absolute version and the relative version. Under the absolute version, the exchange rate simply equals the ratio of the 2 countries’ general price levels, which is the weighted average of all wells produced in a country. However, this version works only if it is possible to find 2 countries, which produce or consume the same wells. Moreover, the absolute version assumes that transportation costs and trade barriers are insignificant. In reality, transportation costs are significant and dissimilar around the world.