Currency Pairs Risk Rates of Return Distribution of Funds

Running head: FINANCIAL MARKETS
Financial Markets
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FINANCIAL MARKETS1
2.2 EUR/USD Forecast
The currency pair surged at the weekly opening well rallying up to 1.1236, or holding
their gains despite a fall in the mood of market. Announcement of a massive bond buying
program of $700 billion and slashing down the interest rate to 0.0% was some of the key
highlights that influenced the movement of the EUR/USD Currency Pair. The dollar eased and
the Wall Street Collapse, after reaching their daily 5% limit. The yields on Friday trimmed as
gains as speculative interest rushed well back to safety levels. The greenback in turn got some
market favor, although it can be well said that is against the European Rival, which has remained
in red, well the same has been tough for investors and analyst operating in the Wall Street. The
EU however did not release any specific data, while at the same time the US March NY Empire
State Manufacturing Index was well seen to fall or it got plummeted to -21.5 in March, which
was observed as far more worse than the 4 expected and the previous 12.9.
Inflation Rate
The inflation rate in both the US and UK economy is well expected to fall with the rapid
fall that is seen in the key commodity prices like. Fall in the prices of Oil to a rapid low levels
has well ensured that the inflation rate would be well saying at a rate that is below 2%. As the
global economy is well turning into a recession phase with slowdown in the economy and rapid
fall in the general price level of the commodities. The fall in the inflation rate is well expected to
stay at a rate that is well below the range of 2% this would be particularly due to the slowdown
in the business activity and spending that would be seen in the US and UK Economy. The fall in
the inflation rate and levels goes to well show that both the GBP and USD Currency is expected
to appreciate as the situation and global environment remains volatile.

FINANCIAL MARKETS2
Interest Rate
Correlation with the interest rate and exchange rate can be well related with the key
economic theories like International Fisher Effect. Movement of the currency is usually seen
with the help of the changes that they observes in the interest rates. As reported if the US Interest
rates are lower than the European Union, the USD would weaken in respect to Euro. Conversely,
it can be well said that the higher set of Eurozone Interest rate, will be weakening the dollar. The
EUR/USD Currency pair has well fallen to around 1.11 after the stocks are into a down fall. The
move well comes with the decision of Fed to well-cut down the interest rate to around 0% and
announcement of massive Quantitative Easing program that would be well taken by the FED.
The interest rate cut was not only taken by the FED, the RBNZ also announced the rate cut at the
beginning of the week, while the BOJ has well announced a series and action of monetary
measures, which are well taken by the banks for the purpose of well cope with the spread of
deadly virus COVID-19 (EURUSD News and Forecast - FXStreet 2020).
Speculation
Speculation or movement of Currency pair can be well analyzed with the help of the
EUR/USD Currency Pair in which different levels of the currency pair would be playing a
crucial role. From a speculative perspective it is well observed that the currency of EUR/USD is
expected to depreciate whereby the EUR currency would be relatively appreciating with respect
to the USD Currency. The slowdown in the US Economy, falling interest rate and rising health
concerns in the form of social impacts would be affecting the overall currency pair movement.
The factors analyzed would in turn also increase the volatility that is associated with the currency
pair.