Chapter 8 – Currency Analysis (Part I)

Switzerland

Central Bank Governor: Thomas Jordan

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Voting Members: Jean-Pierre Danthine, Thomas Moser, Thomas Wiedmer, and Dewet Moser.

Current Interest rate: 0.00%

United States

Central Bank Governor: Ben S. Bernanke

Voting Members: William C. Dudley, Elizabeth A. Duke, Jeffrey M. Lacker, Dennis P. Lockhart, Sandra Pianalto, Jerome H. Powell, Jerome H. Powell, Jeremy C. Stein, Daniel K. Tarullo, John C. Williams, and Janet L. Yellen.

Current Interest rate: 0.25%

 

Due to the nature of the correlation of CHF and the 10 year treasury Yield, during the days where we see them move in tandem we know that the movement is more likely to hold.

Why use the 10-year Treasury Yield Note and what is a Treasury note? A Treasury note is nothing more than a promise to pay by the U.S. Government for its face value and the interest that it bears. US Treasury bill is known as the most secure investment in the world as it is guaranteed by the U.S. Government. We use the 10 year note because of its impact on long-term interest rate, and also when investors move out of the equity market, they tend to invest in treasury notes and bonds.

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Most central banks maintain their foreign Dollar reserves in the form of 10-year T-notes due to the time to maturity. T-notes also have a great impact on the mortgage industry as it is used to determine the mortgage rate in the form of a premium above the established rate, the rate being the T-note rate.

When the Federal Reserve raises interest rate, they buy back T-notes to reduce supply, thus increasing the return value on all T-notes in circulation. When the Feds cut interest rate, they issue more T-notes to reduce the return value of all circulating T-notes as well.

 

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About Kelvin Ching

I'm a professional Forex trader and I have been trading for over 7 years. I was a series 3 broker and a registered CTA with the NFA, the main regulatory agency in the United States, and I have been involved at the highest levels in commodity trading. I also have a background in Information Technology, graphics design, and programming... I'm the co-founder of CurrencyNewsTrading.com, a site dedicated to fundamental analysis and news trading.

Comments

  1. Is there any way to get this book in PDF format
    Thank you
    Marat B

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