International Finance

Currency Forecasting and Investment Project

INTRODUCTION:

You work on the currency trading desk of a large international investment bank. Your boss has asked you to forecast what the exchange rates (USD/AUD, EUR/AUD and GBP/AUD) are going to be on 14 May 2019. Your boss has stressed that you must use a number of different methodologies to forecast these rates and then you must combine the results of these methodologies into one summary forecast for each exchange rate. As your boss is feeling generous, he has decided to let you speculate with AUD$100 million of the bank’s money to try and profit from your forecasts. He suggests that you try and make as much money as you can assuming that your forecasts are correct. Any profits will be split between you and the bank. You make money by changing your AUD into the foreign currencies now and then back again to AUD at the end of the period. In other words you will profit if you put some of your money into a foreign currency that appreciates against the AUD.

Your boss is a busy man so at most he wants the information about your forecasts and trading strategy. This includes text and graphs. References should be included in the text or in footnotes. Your boss does not want to see a separate reference list and does not want to see any appendices. Your boss does not need you to define or introduce your methodologies, just apply them.