Question
how would I structure this assignment for currency AUD/GBP Conduct independent research in order to form a view regarding current and future market conditions and
how would I structure this assignment for currency AUD/GBP
Conduct independent research in order to form a view regarding current and future market conditions and report your findings explaining your market view. Do you believe that exchange rates will go up or down in the next 3 to 6 months? Explain your thinking behind your conclusion.
You are required to analyse what will happen to these exchange rates in the next 3-6 months. Based on the theory that you have learned in class from topic 5 (exchange rate determination), you are required to analyse these exchange rates based on the economic indicators of the respective countries. The indicators you learn in this subject include relative interest rates, relative inflation rates, relative growth rates, government intervention, and exchange rate expectations. You may also use other factors such as the global health crisis, geo-political climate, and the latest news that may affect the exchange rate. It is a good idea to use at least 3 of the economic indicators that you have learned in class and one other factor if you want your market view to be strong. For news and market data, you may use Yahoo Finance, professional magazines, newspapers (see RMIT library e-subscriptions) and financial institutions' websites (e.g IMF, World Bank, OECD databases, and the respective country's central bank website). Note that when it says relative, you are required to compare factors relatively e.g., if you are looking at the AUD/USD and you want to analyse interest rates, you must compare Australia's interest rate with the US interest rate. In your analysis, if you have looked at a particular indicator you must write why you believe that this indicator will cause a currency to appreciate or depreciate against another. For example, if the interest rate in the US is higher than that in Australia and you believe that the interest rate may increase in the US which will cause the AUD to depreciate against the USD, you need to explain why this causes the depreciation of AUD against USD. In addition to examining various macroeconomic indicators (often referred to as fundamental analysis), the historical behaviour of exchange rates can also be analysed to predict future behaviour (technical analysis). For theory discussion, you are expected to cite some academic references from academic journal articles, which can be accessed via RMIT library website. Based on your research, you must individually develop a market view and submit it on Canvas. Once you have completed your analysis, you must clearly state what you believe will happen to the currency pair of your choice. For example, if analysing AUD/USD and you expect the exchange rate to go down, you should state that the AUD would be expected to depreciate against the USD. Keep in mind that currency appreciation or depreciation happens against another currency, so statements like "the AUD will appreciate" and "the AUD/USD will appreciate" do not make sense. Note that only a qualitative forecast is required (i.e., currency X appreciates/depreciates against currency Y), a quantitative forecast goes beyond the scope of this subject
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