The professional forex traders at GVI have assembled acomprehensive array of monetary policy indicators for those trying to anticipate interest rate moves as a factor in exchange rate movements.In banking, foreign exchange is the buying and selling of actual balances by financial institutions who daily execute the transfer of substantial amounts of funds from one currency to another. Interest rates are the cost of funds that are traded and thus affect the value of one currency relative to another. It is the role of Central Banks tocontrol the price of short-term money (e.g. overnight to 3-mo interest rates) via open market operations and control of the money supply. Central Banks use monetary policy to control inflation. Almost all central banks target inflation to one extent to another.

The price of long-term money (e.g. 2-yr to10-yr bonds) is determined by the marketplace and reflects the outlook of investors and borrowers for economic growth and inflation in the long term. Generally, hot money tends to flow from where money is cheapest to where yields are highest. Long-term investors tend to seek out the currencies with the highest real (inflation adjusted) yields, rather than the currencies with thehighest nominal returns.

 The TABLE below is updated daily by GVI and provides the latest readings for short-term interest rates (central bank target andthree-month) and daily changes. It also indicates where futures markets feel 3-mo rates will be at various future times. Included as well is the current official target rate for money, the date for the next policy meeting, and the GVI outlook for that meeting.

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium