When looking at macro data you are stepping back to take look at the greater picture. You are not looking at anything on daily or weekly time frames. You are looking at the long term trends within the market that can develop over years.
Economic cycle – The economic cycle is the natural fluctuation of the economy between periods of growth and contraction. Factors such as gross domestic product, interest rates, levels of employment and consumer spending can be used to judge the current stage of the economic cycle. You can also examine global default rates, international reserve accumulation and bank loan surveys of major economic powers to notice the change. When economies are going into the contraction period these countries central banks may look to lower interest rates to combat this which will affect the value of the currency. It can also indicate currencies or economies that are moving into the expansion phase of their cycle.
Political Environment – Political change can bring about the resurgence or demise of a currency especially when looking at more exotic pairs. Currency rates can be effected by anything from a political vote such as the recent Brexit vote. This was followed by a 10% drop in the GBPUSD rate which has continued to move GBP to one of its lowest in years.
The Asian financial crisis was a period that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. The crisis started in Thailand with the collapse of the Thai baht after the Thai government was forced to float the baht due to lack of foreign currency to support its currency peg to the U.S. dollar
Global Monetary Environment
Interest Rate Policies – When studying you must take into account the policy biases and legal mandates of institutions such as the FED, ECB, Bank of Japan and many more. By studying and clarifying their policy biases, we can have an idea on money supply growth, which will help us decide such variables as emerging market growth potentials, stock market volatility, and the interest rate expectations in a local market. These can be used to profit from interest rate differentials.
Monetary Supply – This covers in the increase and decrease in the overall monetary supply. When countries have gone into a recession central bank may employ easy monetary policies which can lead to an increase in the supply of money. This can also be true when an economy is booming, central banks will often intervene to reduce the supply of money using monetary tools.
A continued period of lax monetary policy such as ultra-low interest rates would imply that the forex market will develop bubbles, that is, currencies of nations with weak fundamentals will appreciate way beyond their fair value, which opens up a trade opportunity for shorting them.
If there are continued periods of very tight monetary policy, it can make investors deleverage and go into safer assets. This can then lead to increases in stable currencies also giving opportunities to short them once the period is coming to an end.
Balance of Payments – This is the record of all economic transactions between the residents of the country and the rest of the world in a particular period. It represents a summation of country's current demand and supply of the claims on foreign currencies and of foreign claims on its currency. This can help to determine the demand for a particular currency which allows you to buy in demand currency’s or sell out of demand ones.
Central Banks – One of the largest movers of markets in the recent years has been central bank intervention which is taking place across several markets by several banks simultaneously. Although the Federal reserve has tempered its quantative easing there are still banks actively engaged. QE has shown it usefulness in reducing the value of a currency by increasing the supply of money.
Simple statements regarding the removal of a peg lead to a dramatic outcome. The January 15 flash crash saw the EUR/CHF drop 40% in seconds due to the Swiss National Bank announcement that it was removing the 1.2000 self-imposed floor on the EUR/CHF exchange rate. The SNB's shocking announcement was made without any prior warning or notice to the marketplace.
There are also occasions when central banks directly intervene in the money markets such as China. the exchange value of the yuan is fixed each morning by its central bank, the People's Bank of China, with a narrow band of only 2 percent allowed, up or down, within which market forces can have their say. In effect, it is an exchange rate set and controlled by the PBoC.