The purpose of this seminar is to give you a good and practical understanding of currency markets and instruments and of techniques, tools and strategies for currency investing, trading and hedging.
We start with a general introduction to currency markets and a history of exchange rates, including the future - of the Euro. We give an overview of instruments traded, including spot, forwards forward-forwards, long and short term swaps, futures and options. We also explain how global currency markets function, including practical issues such as quoting conventions, execution, clearing and settlement of currency transactions. We give a "live" demo of a couple of widely used FX trading platforms, which we will also use to follow the market throughout the course.
We then explain the economic, political and psychological factors that influence exchange rates. Economic factors include government budget deficits or surpluses; balance of trade levels and trends; inflation levels and trends; purchasing power parity. We explain what impact local, regional, and international political conditions may have on currency markets, and we discuss possible causes for "psychological" market reactions such as changing risk aversion, "flight to quality", carry trade reversal etc. We also look at technical considerations related to exchange rates and we explain approaches to forecasting currency movements and how technical analysis is used to spot trends, resistance levels etc.
Further, we explain how investors can invest in currencies as a separate asset class, we present a range of currency trading strategies and we discuss how strategies such as directional and volatility bets, risk reversals and numerous other strategies can be executed using forwards, futures and options. We explain the trading process and stress the importance of a disciplined approach to risk-taking.
Finally, we explain how currency risk can be managed in financial institutions and in the corporate treasury function. We explain how economic, translation, transaction and contingent exposures can be identified and measured, and we explain and demonstrate how these exposures can be hedged using forwards, swaps, futures and options. We also discuss the accounting, regulatory and other practical issues related to currency risk management.