Foreign Exchange Indicator Research Paper Example | Topics and Well Written Essays - 500 words

Foreign Exchange Indicator - Research Paper Example The report also predicts that the Japanese Yen will be a safe bet for people dabbling in foreign exchange and thus, will be strong in the coming months. Both the US and Japanese governments have adopted a near zero interest rate policy. The Euro and GBP have come under stress and will be showing a bearish trend. With a second set of rescue measures being announced by the government to rescue banks in the UK, global investors are viewing the GBP with skepticism and there is a possibility of its remaining weak. According to another report by Forex Capital Markets, a financial services provider in New York, " The Swiss Franc outperformed all other G10 currencies against the USD in the first quarter of the year, gaining nearly 15% on the troubled Greenback. By comparison, the Euro gained only 9%. Limited direct exposure to the U.S. and a massive liquidation in carry trades has driven the Swiss franc higher in the first quarter. However, the significant downturn in the euro zone has begun to transmit the effects of waning global growth to the Swiss economy. Interest rates are now lower in the U.S. than Switzerland. With the Fed intent on further rate cuts, the yield gap between the two countries is expected to widen, which will drive the USD/CHF lower. The case of the EUR/CHF will be quite different.