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FX SPOT (Forecasting Exchange Rates (Fundamental Approach (Monetary Policy…

- - - - US-Federal Open Market Committee (FOMC)
        
        Monetary policy refers to actions undertaken by central bank to influence the availability and cost of money and credit to help promote national economic goals
      - Monetary Authority of Singapore (MAS)
        
        Promote sustained non-inflationary economic growth, and a sound and progressive financial centres
      - Reserve Bank of Australia
        
        Contributes to the stability of the currency, full employment, and the economic prosperity and welfare of Australians. Do so by setting cash rate to meet an agreed medium term inflation target, working to maintain a strong financial system and efficient payments system, and issuing the nation’s banknotes
    - - Interest rate is the price of money and it depends on demand and supply of funds
        
        Changes in interest rates can be traced to
        
        Business cycles
        
        Changes in expected inflation rate
        
        Overseas interest rate
        
        Monetary policy
  - - - Changes in expectation on furture exchange rate
      - Commodity prices
      - Political events
      - Central bank intervention
- - - - BID: 1.2610, where the bank is willing to buy USD and customer will sell at this price ( which is lower).
      - OFFER: 1.2620, where the bank is willing to sell every USD at SGD 1.2620 and customer will buy at this price (which is higher).
      - SPREAD: Offer-Bid (in pips), where the narrower it is, the more liquid the currency is.
- - - - The domestic currency exchange rate is being
        
        Quoted using USD as the reference. Eg, USD/JYP
        
        Quoted using USD as the term currency. Eg, JPY/USD