Trading game

50,000 is a lot of money that can grow to even larger proportions if properly understood how to trade different currencies. Our team was given this money in attempt to grow the funds through trading various currencies that we believe were appreciating and depreciating. Our main source to perform this was articles from Bloomberg. We were looking for current information that could help us make the most optimal trade. We struggled at first understanding the data that was the main contributor to our -274.99 loss. However, our last two trades equated to 287.35. The overall return was -.55%, but with the last two only our return jumped to .57%. Our improvement reflects our dedication as a team and our better understanding of the material. Both the returns and data for trades are in our Appendix. The following paper will address the currencies used, factors that affect the currency exchange rates, our decision explanations, regression analysis, and what we learned from the project. The main currencies we used for the report are currencies from Australia (AUD), New Zealand (NZD), Euro (EUR), Japan (JPY), and the U.S. (USD). Australia and New Zealand’s economy have a strong correlation in that a lot of New Zealand’s exports go to Australia. Per the BusinessDay article attached, Australia’s economy is having a slower than expected recovery from the recent global recession and it is therefore negatively affecting New Zealand’s exports. When an economy is struggling, it may be pressured to devalue their currency in order to encourage more exports to have money come into the country rather than out. The Euro is positioned to rival the USD according to our class textbook and notes. However, the Greece crisis and amongst other countries such as Spain’s fiscal problems make the currency volatile. The USD, being a dominant reserve currency, is also subject to much risk. The coming fiscal cliff presents a major challenge for the country and could affect the exchange rate.