Currency Markets - The average long-term US mortgage rate edged up to 7.19% this week, slightly below its 2023 high


Currency markets, also known as foreign exchange markets or forex (FX) markets, are the global markets where currencies are traded. The currency market is the largest financial market in the world, with a daily trading volume of over $6 trillion. Currency traders, banks, central banks, and other financial institutions participate in currency trading to buy and sell currencies around the clock.

Functioning of Currency Markets

In currency markets, the buying and selling of currencies take place through currency pairs. A currency pair is the quotation of two currencies, where the first currency is the base currency, and the second currency is the quote currency. For example, in the USD/EUR currency pair, the USD is the base currency, and the EUR is the quote currency. The exchange rate indicates how many units of the quote currency are required to buy one unit of the base currency.

The currency markets operate 24 hours a day, five days a week, across time zones. As a result, the forex market is a highly liquid and accessible market for traders and investors worldwide, with few barriers to entry. The currency market provides an opportunity for individuals, institutions, corporations, and governments to manage foreign exchange risk and make profits from currency market movements.

Market Participants

The currency market’s participants include central banks, commercial banks, investment banks, hedge funds, corporations, and retail traders. The currency market’s participants primarily use the forex market to buy and sell currencies to meet their financial needs and to make a profit from fluctuations in exchange rates. The market participants’ motives vary, from speculative trading for profit to hedging against currency risks to facilitate international trade and investment.

Central Banks: Central banks play a crucial role in the currency markets because they are responsible for managing their country’s monetary policy. Central banks also maintain foreign exchange reserves and issue currency, which can influence the value of a country’s currency. The central bank’s actions related to interest rates, money supply, and foreign exchange interventions can affect exchange rates.

Commercial Banks: Commercial banks are the primary market makers in the currency market. They facilitate currency trading for their clients and maintain liquidity in the market by providing bid and ask prices for currency pairs.

Investment Banks: Investment banks participate in the currency market by providing liquidity, managing currency risks, and providing advisory services to their clients to invest in the forex market.

Hedge Funds: Hedge funds are investors that trade in the currency market for profit. They use various trading strategies, including arbitrage, carry trade, and trend following, to make profits in the currency markets.

Corporations: Corporations use the forex market to manage their foreign exchange risks, which arise due to their international business operations. They use currency hedging products such as forwards, swaps, and options to mitigate currency risks and to facilitate international trade and investment.

Retail Traders: Retail traders are individual investors who participate in the forex markets for personal investment reasons. Retail traders access the currency market through forex brokers, which provide online trading platforms and leverage to trade currency pairs.

Instruments in the Currency Market

Currency trading can be executed through various instruments, including spot transactions, forwards, futures, and options.

Spot Transactions: A spot transaction is the buying or selling of currency at the current market exchange rate. Spot transactions are settled within two business days of the transaction date.

Forwards: A forward contract is an agreement between two parties to exchange a specific amount of currency at a predetermined exchange rate on a future date. Forwards are used primarily to hedge against currency risks.

Futures: A currency futures contract is a standardized contract to buy or sell a particular currency at a predetermined price and date in the future. Futures contracts are traded on exchanges and are subject to margin requirements.

Options: An option is a financial derivative that gives the buyer the right but not the obligation to buy or sell a currency at a predetermined price and date in the future. Options can be used for hedging or speculative purposes.

Factors Influencing Currency Markets

Several factors influence the currency markets, including economic indicators, interest rates, geopolitical events, central bank interventions, and market sentiment.

Economic Indicators: Economic indicators, such as gross domestic product (GDP), inflation, employment, and trade balance, provide insight into a country’s economic performance. Better-than-expected economic indicators can lead to currency appreciation, while weaker-than-expected indicators can lead to currency depreciation.

Interest Rates: Interest rates are a crucial factor in currency markets because they affect currency demand. Higher interest rates attract foreign investment, resulting in currency appreciation, while lower interest rates discourage foreign investment, resulting in currency depreciation.

Geopolitical Events: Political instability, terrorism, wars, and trade disputes can impact currency markets. These events can increase uncertainty and risk, leading to currency volatility.

Central Bank Interventions: Central banks intervene in the currency markets to manage their country’s currency value. Central banks may buy or sell their currency in the market to influence its value.

Market Sentiment: Market sentiment refers to the overall attitude or mood of participants towards a particular currency or market. Market sentiment can influence currency prices even if economic fundamentals do not justify the price movement.


Currency markets are critical to the global economy and provide a platform for individuals, institutions, corporations, and governments to manage foreign exchange risk, invest, and make profits. The currency market operates around the clock and is highly liquid, with few barriers to entry. Market participants use various instruments, including spot transactions, forwards, futures, and options, to buy and sell currencies. Several factors influence currency markets, including economic indicators, interest rates, geopolitical events, central bank interventions, and market sentiment. Traders and investors need to understand the fundamentals and technical analysis of the currency markets to be successful in currency trading.

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Yuan Weakens Toward Key Psychological Level Amid Data Misses


23-05-17 00:20

China's yuan has weakened towards the 7-per-dollar threshold, its weakest this year, after weaker-than-expected economic data raised concerns about the country's growth prospects. Analysts predict that if it falls below 7, the currency could trigger retaliatory measures by US President Donald Trump, who has repeatedly accused Beijing of manipulating its currency. Some see a weaker yuan as a tool China could use to ease the effect of US tariffs and a slowing economy, but it also risks capital flight from the country.
Seattle startup’s ex-CFO accused of diverting $35 million, losing it in crypto crash

Associated Press

23-05-18 00:35

The former CFO of a Seattle-based startup, Nevin Shetty, has been accused of taking $35m in company funds and using it to invest in cryptocurrency via a platform he owned. He hid the transactions from Fabric, secretly transferring the money to his HighTower Treasury platform, said the federal indictment. The funds invested soon became worthless. Shetty was subsequently fired and is now facing indictment charges on four counts of wire fraud regarding the incident. His lawyer Cooper Offenbecher, said Shetty disputed the accusations, arguing that the catastrophic crypto market crash following his investment lost the money, rather than the decision to invest itself.
China Allows Argentina to Spend Up to $10 Billion of Currency Swap Line


23-06-02 14:18

China has approved an increase in the amount Argentina can withdraw from a currency swap line. The central bank has said that the South American country can now withdraw up to 70 billion yuan ($9.89bn), double the previous limit, due to the country's ongoing battle against 100% cash-strapped inflation ahead of a presidential election later this year. Economy Minister Sergio Massa met with Yi Gang, People's Bank of China Governor, in a meeting that waged issues against geopolitics and dependence on the US dollar. Argentina's central bank has minimal liquid foreign reserves remaining, which has tightened controls on imports as it cannot finance them through official currency channels.
Dollars Are So Scarce in Argentina That Yuan Use Is at a Record


23-06-23 11:00

A shortage of dollars in Argentina has forced companies to turn to China's yuan to pay for imports as the country's dire financial straits highlight Beijing's ambitions for its currency. More than 500 Argentine firms have requested to pay for imports in yuan, including electronics, auto parts, textile, oil and mining companies, according to the country's customs agency. Argentina's currency has lost half its value over the past year and its central bank's dollar reserves are at their lowest level since 2016.
The US and China Are Waging a Cold War That Is Truly MAD


23-09-10 04:00

The concept of "mutually assured destruction" (MAD) was a defining characteristic of the Cold War between the US and the Soviet Union. In today's era of a new Cold War between the US and China, MAD has taken on a different form: mutually assured financial destruction (MAFiD). The economic interdependence between the two superpowers, combined with their vulnerabilities and weaknesses, creates a deterrent against escalating tensions into a full-scale war. However, the article cautions that MAFiD may not be a sufficient guarantee against a conflict, as historical examples suggest that financial considerations did not prevent wars in the past. The article also highlights the military and naval challenges that both the US and China would face in the event of a showdown over Taiwan, as well as the economic implications of such a conflict. The US and China are the two largest economies in the world, and a war between them would have catastrophic consequences for global markets. Therefore, the prospect of MAFiD may serve as a deterrent, but it is not foolproof, and the risk of escalation should not be underestimated.
The average long-term US mortgage rate edged up to 7.18% this week, where it stood two weeks ago

Associated Press

23-09-14 16:12

The average long-term mortgage rate in the US rose slightly this week, adding to the costs for potential homebuyers who are already facing limited housing options and rising prices. The average rate on a 30-year home loan increased to 7.18%, up from 7.12% the previous week. This is significantly higher compared to the 6.02% average rate recorded a year ago. The rise in mortgage rates mirrors the increase in the 10-year Treasury yield, which lenders use to determine loan prices.
The average long-term US mortgage rate edged up to 7.19% this week, slightly below its 2023 high

Associated Press

23-09-21 16:11

The average long-term mortgage rate in the US has risen to 7.19%, according to Freddie Mac. This marks a further increase in borrowing costs for potential homebuyers in the country's increasingly unaffordable housing market. The average rate on 15-year fixed-rate mortgages, popular with homeowners refinancing their mortgage, also rose to 6.54% from 6.51% the previous week. High mortgage rates can add hundreds of dollars a month in costs for borrowers, making homes even less affordable for many Americans.