The dollar is still trading very weekly compared to less than four months ago when it was almost at USD parity. The reasoning ? Mainly driven by the falling Japanese market and the trading of heding positions using interest rates. The overnight unemployment figures increasing from 4.1% to 4.3% did pretty much nothing to the currency [...]

With all the emails yesterday about the Lehman Brothers collapse, the acquisition of Merrill Lynch by the Bank of America and the US Federal Reverse and Treasury’s overnight emergency resuscitation of the American International Group (AIG) with an $85 Billion USD breath of air – I thought I would put up a post about some of the [...]

Inflation is apart of every countries economic structure, and is the rate at which the general level of prices for goods and services rise each year. It is why many goods generally will increase in price over time. It’s the reason why our parents go on about how little things used to cost when they [...]

Interest Rates As discussed previously, forward exchange rates are expressed as a forward discount or a forward premium. The most common reason as to why they are higher or lower than the current spot rate is due to the interest rates of the 2 countries involved in the currency exchange. Indirect Quote Example Say the [...]

Forward Contracts are a form of exchange contract which can be organized to lock in a given price to exchange currencies at a pre-determined future date. They are usually quoted in terms of the difference between the spot rate and the forward rate.  This difference is known as forward margin.  It is either forward premium [...]