Forex Report
Executive Summary
This report details the performance of Corporation G and Bank A during the simulated foreign exchange dealing sessions of 15/03/2012 and 22/03/2012.
We were provided with a trading scenario at the start of each trading session. During session 1 our team acted as Corporation G (price takers) and during session 2 we acted as Bank A (price makers). As a corporation we were presented with a foreign exchange risk management problem to solve, involving trading in spot and forward foreign exchange products. At dealing session number 2, we were presented with a scenario to act as a bank and provide liquidity to the market.
In this report we will discuss our strategies and outline how we were able to achieve them. The starting point was to analyse any data that could have an impact on the currencies related to our objectives. The general nature of the FX market is that it is generally sensitive to new information. In order to have an informed position it is essential to consider the most up to date and recent relevant economic data. Furthermore, it was essential to analyse the market data before the dealing session in order form a relevant strategy. It is critical to keep in mind that the 7 day gap between the two dealing sessions would have included new information and new events that would affect our trading objectives and overall portfolio; therefore, it was necessary to reconsider and adjust our sentiment towards each currency.
On our first dealing session, given the available data and technical analysis, we anticipated that most major currencies would depreciate against the US Dollar. We consequently based our trading strategy on these predictions. On the second day of trading, 7 days later, we suspected that the US dollar and the Yen would be relatively strong against the Euro and the Aussie dollar, and that the Aussie dollar would appreciate against the British pound.
The idea of trading is quite simple, that it consists of buying one
This report details the performance of Corporation G and Bank A during the simulated foreign exchange dealing sessions of 15/03/2012 and 22/03/2012.
We were provided with a trading scenario at the start of each trading session. During session 1 our team acted as Corporation G (price takers) and during session 2 we acted as Bank A (price makers). As a corporation we were presented with a foreign exchange risk management problem to solve, involving trading in spot and forward foreign exchange products. At dealing session number 2, we were presented with a scenario to act as a bank and provide liquidity to the market.
In this report we will discuss our strategies and outline how we were able to achieve them. The starting point was to analyse any data that could have an impact on the currencies related to our objectives. The general nature of the FX market is that it is generally sensitive to new information. In order to have an informed position it is essential to consider the most up to date and recent relevant economic data. Furthermore, it was essential to analyse the market data before the dealing session in order form a relevant strategy. It is critical to keep in mind that the 7 day gap between the two dealing sessions would have included new information and new events that would affect our trading objectives and overall portfolio; therefore, it was necessary to reconsider and adjust our sentiment towards each currency.
On our first dealing session, given the available data and technical analysis, we anticipated that most major currencies would depreciate against the US Dollar. We consequently based our trading strategy on these predictions. On the second day of trading, 7 days later, we suspected that the US dollar and the Yen would be relatively strong against the Euro and the Aussie dollar, and that the Aussie dollar would appreciate against the British pound.
The idea of trading is quite simple, that it consists of buying one