What are the effects of cross exchange rates on direct exchange?
- When the direct exchange market fluctuates in a consolidation range, many transactions will turn into arbitrage transactions, so many transactions will use the changes in the cross exchange rate to achieve the purpose of profit. Most of the more common combinations of such transactions are It is a currency pair with geography or isomorphism such as EURCHF, AUDNZD.
- In the Eurasian session (the US session has not yet opened), the market lacks a major driving force, and direct foreign exchange transactions are carried out through cross fluctuations. This type of transaction is mostly caused by traders adjusting the structure of their positions. generated volatility.
- Large-scale trade settlement. When two regions have large-scale cross-border trade transactions, mergers and acquisitions, etc., and the date of payment settlement is approaching, the cross exchange rate often affects the direction of direct exchange transactions, because such trade behaviors often The exchange rate for their transactions is agreed in advance , and then financial products such as forward exchange or option are used to lock the exchange rate. Therefore, when the settlement date is approaching, there may be a situation where the cross exchange rate dominates the fluctuation of the direct exchange.
- The capital flow caused by redemption or purchase at maturity in the bond market. The bond market is the largest financial market in the world after the foreign exchange market , especially China and Japan (currently the two countries with the largest foreign exchange reserves
- The exchange rate fluctuations caused by the carry trade, the early carry trade has a limited impact on the market, and in recent years, the carry trade has become the mainstream transaction type in the market. The carry trade can be divided into two categories: one. One is the traditional carry trade behavior, and the other is the trade behavior generated by the use of market psychology under the guise of carry trade. No matter what kind of carry trade, at this stage, there will be certain degree of influence.