This report provides an analysis of the foreign exchange market, focusing on forecasting currency rates and developing trading strategies. The report examines the historical movements of USD, Euro, and GBP against AUD using technical analysis, and then forecasts future rates based on this analysis. It also applies the Interest Rate Parity Theory (IRPT) and Purchasing Power Parity Theory (PPPT) to predict currency movements. The report combines the results from these three methodologies to arrive at an average predicted rate for each currency. Based on these predictions, a trading strategy is devised, allocating AUD 100 million across USD, Euro, and GBP, with the goal of generating profits through currency appreciation. The report concludes with a summary of the forecasting methodologies and the successful trading strategy, which generated a profit of AUD 0.58 million over a one-year period. The report emphasizes the importance of diversification in managing risk and the use of multiple forecasting methods for greater accuracy.
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