EUR / GBP Trends Using Autocorrelation and Correlation Approaches

Many analysts have likened the patterns of the EUR/GBP value changes to those of the EUR/AUD when viewed from the viewpoint of correlation analysis of two-point scale. Autocorrelation is a straightforward method that makes use of inter-disciplinary approaches in order to conduct market efficiency tests within the scope of the EUR/GBP.

In most cases, analysts make use of up to 100 hours worth of time-length so as to come up with a wide range of statistical data. The time series limits may extend for up to 20 units in order produce measures of returns that are properly distributed within different time limits so as to come up with free correlations.

When the two currencies are being considered for purposes of comparison, a time lag of one hour has to be the main variable within which all other factors fall. In one such analytical study that was carried out so as to find about the relationship between these two currencies between 2002 and 2009, each of the currencies was compared to other major currencies.

Read more

Short Term and Long Term Comparison of USD / JPY

Long-term trends in the strength of the Japanese yen were witnessed for the longest time in the currency’s history only during the period between 1985 and 1995. The only interruption that occurred was during a stint in 1989. This stability resulted in a very amazing 71% rating of the JPY against the USD

Sometimes though, sudden reversals have to occur which might have rather violent outcomes to investors. These reversals occurred in 1990 and later on in 1998. At the present indications, the USD is heading for an over-bought condition when viewed against the JPY. There is therefore a real danger of a sudden trend reversal. The world ought to be aware of these dangers and should prepare accordingly.

One might say that the further we go in the task of predicting the behavior of the Dollar against the Yen, the closer we get to the point of trend reversal. When the present scenario is closely observed, one can clearly see that things are not as bad as they were in 2002. In 2002, there was a multi-year reversal.

Read more

What Really Brings About Currency Crises?

Many investors and international financiers have within the last two decades been caught off-guard by currency crises. Their knee-jerk responses to small economic tremors have always been in the form of capital flight and runs on different currencies. Many people argue that it is such reactions that really cause earth-shaking currency crises.

What analysts are sure about is the fact that many investors don’t take time to understand the market dynamics before making their decisions. They rely on their instincts at the expense of the economyís minutia. A currency crisis is said to have occurred when there is a sharp decline in the value of an economy’s currency. Such a decline creates much instability in areas like exchange rates.

In simpler terms, a currency crisis is the result of an interaction of very many factors. One of these factors is investor expectations.

Read more

Fundamental and Technical Currency Strategies

Foreign exchange markets are today very popular places for one to trade. Being a successful foreign currency trader entails having some strategies in place to help you out on the path of success. Most of the strategies that one can employ come in the form of a trading guide.

One of the most remarkable attributes of foreign currency exchange markets is that the level of liquidity is always extremely high. This simply means that the goods being exchange in this market, which in this case is currency, donít change in value when they are changed into other goods.

High liquidity translates into very low market power across many currency markets. A single entity has the ability to lower or raise the foreign exchange values, with the overall effect being a leveled-out playing field for both large and small corporations.

Read more

Prospects of a One World Currency

The current monetary system has been blamed for the frequent episodes of turmoil that shock the world in the form of financial crises. Many economists argue in support of a new global financial order whereby only one currency will be in use. This, they argue, would remove the control of currencies from the hands of a few people.

The current financial order where each country controls its own currency was started by the elite and the influential. Many economists are today concerned that the issue of instituting a single world currency should be considered as an emergency. The quest for an economically harmonized world traces its roots to the drafting and signing by various countries of the Bretton-Woods Agreement as early as 1944.

The Bretton-Woods Agreement was spurred by the economic depression that was witnessed in the 1930s and during the Second World War. The current global economic crisis presents the world with another chance of imposing sterner regulations on national sovereign economies.

Read more

Hot Currency Exchange Works

The current monetary system gives a provision for the free exchange of different currencies at the prevailing market rates between countries. Many people view forex trading as a form of gamble. The sheer unpredictability of markets makes the trade very volatile. Every day, billions of dollars exchange hands in the currency exchange markets.

Everyone who engages in foreign exchange markets hopes to get some profits from the resulting market changes. Changes that bring about profits may come within a two-second notice and may involve a fraction of a percentage change. In order to know if this is the right kind of job that you should pursue, you need to always be able to handle all these instinctual decisions with precision and speed in order to maximize on profitability.

Positional strategies are the best option for those who want to engage in the trade on a small scale basis. A good example is the current scenario where the Euro has dipped against the dollar.

Read more