What is a Cross Rate?

In the international market, almost all currencies have an exchange rate against the US dollar. The exchange rate of a non-US dollar currency against another non-US dollar currency often requires the use of these two exchange rates against the US dollar. The calculated exchange rate is called the cross exchange rate. A significant feature of cross-exchange rates is that an exchange rate involves the exchange rate between two non-US dollar currencies. It is a currency pair that uses a cross exchange rate to become a cross in foreign exchange transactions, such as GBP / CNY.

Cross rate

Cross exchange rate: refers to the

Work out

At the end of 1993,

cross

(1) may be some

Comparing since 2005,

Calculate Crossover

To understand cross

The combination of cross exchange rates can be roughly divided into three types of blocks. If you want to know more about cross exchange rates, you must first understand these different blocks, as if you are operating a direct exchange, you will consider other currencies. The trend is the same. These different blocks will have overlapping parts. How these currencies affect each other's changes will be explained in intermediate and advanced classes. Here we only explain the principle:

The first block is the cross exchange rate generated by European currencies led by the Euro, such as EUR / JPY, EUR / CHF, EUR / SEK, EUR / GBP, etc .; the EU has close trade relations with the world, and the euro is The proportion of foreign exchange reserves is second only to the US dollar. In addition, the proportion of the euro-denominated crude oil market in the future will gradually increase. Therefore, the cross exchange rate of the euro is very important; most of the cross exchange rates dominated by the euro are the most intensive moments of change. It is from 2 pm to 8 pm Beijing time. At this time, the Asian market is coming to an end. When the US market has not yet begun, when the market lacks news of the US dollar, it is often affected by changes in the cross exchange rate. Direct exchange rate.

The second block is the cross exchange rate related to the Japanese yen: such as EUR / JPY, GBP / JPY, AUD / JPY, etc .; Japan is the world's largest single economy, Japan's economic strength is well known, and Japanese products It is spread all over the world, so most of the Japanese Yen cross exchange rate has its research value. Many changes in the direct exchange rate are affected by the Japanese Yen exchange rate. Its carry trades have prevailed in the past two years. The low yen interest rate and the Japanese Yen cross exchange rate It has also affected the change of the Xu Zhi currency exchange. If you want to study the movement of the carry currency, you must not just look at the changes of a group of yen to the high-interest currency, but you must observe the cross exchange rates of all yens at the same time. During the time period, there are Asian, European and American markets. It is difficult to clearly determine the trading period of individual fluctuations. The only thing worth mentioning is when the Australian and Japanese markets just opened from 6am to 9am Beijing time. The interest rates of the New Zealand dollar and the Australian dollar are the highest among the major trading currencies, while the Japanese yen is the lowest. The data release of the New Zealand and Australian dollars is during this period, so there are often large fluctuations.

The third block is the cross exchange rate related to the British pound: such as EUR / GBP, GBP / CHF, GBP / JPY, GBP / SEK, etc .; the British Empire is

Exchange rate increase electronic column

The country with the strongest economy in Europe, Britain s reluctance to join the European Union, has also made the euro inferior. In addition, Britain s Beihai Oilfield is an important oil exporter other than the Middle East, so the British pound is often the Middle East oil country s favorite hype. One of the foreign exchange landmarks, the changes in the cross of the pound sterling often have unexpected developments. The change of the cross exchange rate of the pound is roughly two periods, one is the European trading session, and the other is after the European close. After one point, there are only trading hours for the US and the Middle East, but the second situation has been rare in recent years.

There is also a cross exchange rate that I did not separate into a single block. It is a regional-based cross exchange rate fluctuation, such as the cross exchange rate between the Japanese yen and Asian currencies, or the cross exchange rate between the New Zealand dollar and the Australian dollar. The volatility is relatively irregular. It is usually affected by a single event and has an interactive effect. In this part, we usually need to find and read various financial information. The last thing to mention is that if the RMB is fully floating in the future, then the There will be some new changes, and everyone is worth doing more research and understanding.

Mutual relationship between cross exchange rate and direct exchange

When we think about the changes in cross exchange rates and direct exchanges, we often don't know who is affecting whom, sometimes the fluctuations in cross exchange rates affect the fluctuations in direct exchanges, and sometimes the fluctuations in direct exchanges. In view of the fluctuation of the cross exchange rate, this is like the food chain of the biological world. It cannot say an absolute standard. It can only use our accumulation of experience and understanding of various ecology as a judgment; so if you want To be able to see the overall change relationship of the foreign exchange market, you can't just look at a picture. You must develop a habit of looking at the overall situation and slowly cultivate your sense of the market. You can also easily find the cause of the error; here we first make a basic explanation of the mutual fluctuation of the direct exchange rate and the cross exchange rate.

When we use the cross-exchange rate judgment to perform the direct exchange operation, there are many possible permutations and combinations. For example, when we expect the EUR / JPY to fall, we need to perform the direct exchange operation of EUR or JPY, then we will Taking into account the movement direction of JPY, the fluctuation of these two currencies against the US dollar may be the following situations

Euro drops ===== yen rises

Euro declines ===== yen flat

Euro fell ===== The yen fell less

Euro remains flat ===== yen rises

Euro rises ===== Japanese yen rises more

Conversely, if we expect the EUR / JPY to rise, the fluctuation of these two currencies against the US dollar may be

Euro up ===== Japanese yen down

Euro rises ===== Yen is unchanged

Euro rises ===== Yen rises less

Euro flat ===== yen down

Euro drops ===== Yen falls more Euro drops ===== Yen falls more Euro drops ===== Yen falls more

In this kind of judgment thinking, if you add more than the second group of cross exchange rate combinations to make judgments, such as adding GBPJPY's change thinking, it will be more complicated, but it is not significant in general operation, or For ordinary traders, it will become too difficult. You can study more permutations and combinations of this type, and you will find that the cross exchange rate is not as difficult as you think, and it is very helpful for your trading.

The above fluctuation patterns of cross exchange rates often contain the fluctuation power and direction of the direct exchange. It is not difficult to understand this type of permutation and combination. The difficulty is that you must determine the direct exchange from multiple types. What type of group does it take, so we still have to return to the direct currency research of the two currencies, and we can find out the real structure of the market repeatedly. In many cases, we have operated certain currencies, but found all currencies. They all go in the same direction. Only the currencies we operate do not move or go in the opposite direction. Often this is because the cross-exchange rate is weird. In the past two years, this situation has been most obvious in carry trades. The study of exchange rate is an auxiliary tool to understand the fluctuation structure of direct exchange rate. It is still mainly to operate direct exchange rate, otherwise it is better to directly operate the cross exchange rate, but it is not so complicated. After knowing and understanding, don't waste food because of stubbornness. After simple and complicated, don't forget to simplify and simplify.