currency markets and fx strategy
Educational articles in this subcategory.
Glossary: Currency Market Terms
Currency markets use specialized terminology that can obscure straightforward concepts. This glossary defines the essential terms you'll encounter whe...
Reporting FX Gains and Losses for US Taxes
Foreign currency gains and losses receive special tax treatment under the Internal Revenue Code. The default rule under Section 988 treats most forex ...
Cryptoassets vs. Traditional Currency Markets
The global foreign exchange market trades approximately **$7.5 trillion daily** through a network of banks, central banks, and institutional investors...
Using Options for Tail-Risk Hedges
Forward contracts lock in an exchange rate with certainty—but certainty cuts both ways. When your €10 million receivable is hedged at EUR/USD 1.0800 a...
Corporate FX Risk Management
Companies with international operations face currency risk that directly affects cash flows, reported earnings, and competitive position. A US manufac...
Cross-Currency Basis Swaps
## What Are Cross-Currency Basis Swaps? A cross-currency basis swap is an agreement between two parties to exchange principal and interest payments i...
Carry Trade Mechanics and Risks
## What Is a Carry Trade? A carry trade involves borrowing in a low-interest-rate currency and investing the proceeds in a higher-interest-rate curre...
Balance of Payments Impact on FX
## The Balance of Payments Framework The balance of payments (BOP) records all economic transactions between a country and the rest of the world. By ...
Political Risk and Currency Moves
## How Politics Moves Currencies Currency markets respond to political events through their impact on expected economic policy, capital flows, and ri...
Emerging Market Currency Risk
## Why EM Currencies Behave Differently Emerging market currencies operate under fundamentally different conditions than G10 currencies like the US d...
Macro Drivers of USD Strength or Weakness
## Why the Dollar Moves The US dollar is the world's dominant reserve currency, held by central banks globally and used in most international trade i...
Measuring Trade-Weighted Exchange Rates
## Why Trade-Weighted Indexes Matter Bilateral exchange rates (EUR/USD, USD/JPY) tell you about one currency relationship. But when assessing a curre...
Currency ETFs and ETNs
## Overview of Currency ETPs Exchange-traded products (ETPs) provide retail investors access to currency markets without opening a forex account or t...
Hedging Foreign Stock Positions
## Why Currency Exposure Matters When US investors buy foreign stocks, they take on two distinct risks: equity price risk and currency risk. A Europe...
Central Bank Intervention in FX Markets
## What Is FX Intervention? Central bank intervention occurs when monetary authorities buy or sell currencies to influence exchange rates. Unlike nor...
Using Currency Futures and Options
**Exchange-traded currency derivatives provide standardized, centrally cleared exposure to FX markets.** Unlike OTC forwards negotiated bilaterally, C...
Interest Rate Differentials and Carry
**Interest rate differentials are the gravitational force of currency markets.** They determine forward points, drive carry trade flows, and explain w...
Dollar Index Composition and Signals
**The U.S. Dollar Index (DXY) measures the dollar against a basket of six major currencies—but the basket is heavily skewed toward Europe.** The euro ...
How Exchange Rates Are Quoted
**Currency quotations follow strict conventions that determine who pays what.** Misunderstanding these conventions leads to costly errors—buying when ...
Spot vs. Forward FX Markets
**The FX market splits into two distinct segments: spot for immediate delivery and forwards for future delivery at locked-in prices.** Understanding t...