Let me talk about the fundamentals of foreign exchange

Fans often ask me:

UBM, can you recommend some books on fundamental analysis of foreign exchange and gold?

My answer is: no!

In fact, there are books. I used to be a leader in the bank. I have about five or six books on foreign exchange fundamentals, but my evaluation of these books on fundamental analysis is one word:

Garbage.

The content inside is just high-end goods, and the introduction of basic knowledge is okay, but the analysis and grasp of the main contradictions of each currency variety is completely missing the point.

Of course, there is a lack of books in this area. The main reason is that the foreign exchange trading product is still an extremely unpopular trading product in China. There are not many senior talents in this industry. Basically, they are either liars or fools.

For the evaluation of liars and dicks, if you feel offended, you can take it as my evaluation of myself.

So how did I learn the basic analysis knowledge of foreign exchange and gold?

In addition to training in the bank before and learning some basic knowledge, more is still explored and summed up in the transactions of more than ten years. In fact, a lot of knowledge has not been written in books, and no one has even written it. I have summed it up, but do it slowly, you can experience the characteristics of this breed.

Here is an example for you:

My favorite foreign exchange product, or the product with the deepest understanding of its attributes, is the Japanese yen.

The yen can be said to be the simplest of all foreign exchange varieties, and the fundamental analysis is the simplest and most straightforward.

This variety has several characteristics: Negative interest rates make it a financing currency, so many arbitrage institutions around the world like to do yen, which has triggered the yen's hedging attributes.

At the same time, it can also be deduced from this point that the US dollar/yen is the product that responds most sensitively to the interest rate difference between the United States and Japan. Therefore, after the US dollar’s ​​sharp interest rate hike this year, the market in the United States and Japan has gone the largest.

Here is another variety that is particularly similar to the Japanese yen:

swiss franc .

I basically didn’t trade Swiss francs in the past, that is, I only started trading in the last one or two years. Last year and this year, I traded more than one Swiss franc and made a lot of money. So I started slowly researching the breed.

In the last year, I found that the Swiss franc and the Japanese yen moved very similarly:

The picture below is the US-Japan trend chart from 2020 to 2021

The picture below is the trend chart of Meirui in the same period:

Have you noticed that the trend is very similar?

And from a fundamental point of view, it is also very similar:

1. Both the yen and the Swiss franc are products with negative interest rates.

2. Both the yen and the Swiss franc are safe-haven currencies.

After I found something like that at the time, so I would often refer to Yen to make Miri. But later in the process of researching slowly, I began to find that the Swiss franc and the Japanese yen are still very different.

Obviously, the increase rate of the United States and Japan this year is far greater than that of the United States and Switzerland. At the same time, the negative interest rate varieties, the United States and Switzerland should also be sensitive to the interest rate difference. Why does this happen?

In fact, after slowly thinking and pondering, I found that the Swiss franc and the Japanese yen have similarities, but there are also many differences:

For example, although they are all currencies with negative interest rates, the yen can be used as a currency for global arbitrage, but the Swiss franc cannot. Does anyone know the reason?

There is still a fundamental difference between the safe-haven properties of the yen and the Swiss franc, which should be easy to figure out.

Therefore, we cannot make a simple analogy. Only after understanding these differences can we choose the best trading target at the right time.

Well, let’s talk about it casually. The reason why I write this is actually because I want to repeat a previous sentence:

To do business, you need to have a tiger in your heart and sniff the rose carefully.

How to sniff roses? Just to think about the difference slowly.

Finally, let me mention one more point: the ruble is actually a commodity currency like the Australian dollar and the Canadian dollar (although I have never done it, I discovered this characteristic of the ruble after the Russian-Ukrainian war this year)

And what are the characteristics of RMB? Has anyone thought about it?

Of course, I can't expand and write here.

Well, if I really have this interest in the future, I can consider writing something about the fundamental analysis of foreign exchange gold.