Forex Trading News

In trading, there are countless variables that can impact the outcome of any trade, so intuition can be a reliable tool in many circumstances. For experienced traders, it can provide an intuitive edge – guiding them beyond data and analytics. But what really is intuition, and how does one use it in trading?   Key […]

Building trading and investing algorithms involves a blend of financial theory, mathematics, programming, and data analysis. These algorithms are designed to make trading decisions based on certain criteria, which can include any number of factors based on the underlying cause-effect relationships governing the decisions. Building trading and investing algorithms is a complex, iterative process that […]

Welcome to a comprehensive guide on currency trading and macroeconomic relationships. Currencies are a macro asset class. In a previous article, we looked at currency valuation models. In this article, we’ll delve more specifically into dozens of concepts that are critical to understanding how macroeconomic factors affect currency values and how to use this knowledge […]

In a separate article, we covered the current status of the basic reserves today; namely, the USD, EUR, JPY, GBP, CNY, and gold, as the main few. In this article, we’ll cover reserve currency history as well as reserve currency status, the benefits it brings, and how it’s lost. We are currently in a precarious […]

In international investment, currency risk is a significant concern, which leads to the concept of FX hedging. When investors from one country, such as Japan, buy foreign bonds, they must exchange their domestic currency (JPY) for another (such as USD or EUR). This exposes them to foreign exchange (FX) risk, which many prefer to avoid. […]

The Exchange Rate Overshoot Hypothesis, often referred to as the Overshooting Model, is a concept in foreign exchange (FX) trading. It offers an explanation for the often volatile short-term movements in exchange rates. Understanding this hypothesis can provide FX traders with insights into the dynamics of the currency markets they trade.   Key Takeaways – […]

Different traders have different ways of determining a currency’s fair value price. Clearly, different expectations and different motivations are what make a market. While many traders have their own decision rules and proprietary systems, there are currency valuation models and ways of looking at the currency markets that are the most common.   We’ll cover […]

Before trading foreign equities denominated in a different currency, it’s important to understand that it’s not just the returns, but returns + the currency movement. For example, if the USD has a higher nominal interest rate than the JPY, it will have implications for the forward curve of the USD/JPY currency pair. So if a […]

Interest rate parity (IRP) is a fundamental concept in international finance that describes the relationship between interest rates and foreign exchange rates. At its core, IRP asserts that the difference in interest rates between two countries is equal to the expected change in their exchange rates. We also give a mathematical example below.   Key Takeaways […]

Thirlwall’s Law, named after the British economist Anthony Thirlwall, is a principle in macroeconomics that explores the relationship between economic growth and the balance of payments in an economy. It posits that the long-term growth rate of an economy is directly related to the growth rate of exports divided by the income elasticity of demand […]