NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAMS

GROUP PRESENTATION

INTERNATIONAL FINANCE MANAGEMENT

TOPIC: Update and analyze the relationship (if any) between prices of

GBP, USD, EUR, JPY and CNY. Forecast for November 2020.

Group: 4
Class: IBA 60B EEP
Major: International Bussines Administration
Lecturer: Dr. Hoang Lan Huong

Hanoi, October 12, 2020

 INTRODUCTION
After 2 weeks, there are several events that’s affect the difference currencies
around the world. Among all of them, we’re chosing 4 main events that have a
strong influence on the 5 currencies this presentation will talk about:
1. 29/9: First President Debate in America.
2. 1/10: U.S House leaders determined to pass $2.2 trillion on coronavirus bill.
3. 2/10: Donald Trump tested Positive for the Coronavirus.
4. 5/10: Donald Trump was discharged from the hospital.

UPDATE & ANALYZE

I. USD:

1. The USD:

 Definition: The USD ($) is the abbreviation for the U.S. dollar, the
official currency of United States of America and the world's primary
reserve currency.
 Characteristics: The USD is the most traded currency in the international
foreign exchange market, which facilitates global currency exchange and
is the largest financial market in the world. The U.S. dollar is considered
a benchmark currency and is the most-used currency in transactions
across the world.

2. The US Dollar Index (USDX, DXY, DX, USD Index)

 Definition: a measure to compare the value of the United States Dollar

(USD) against six currencies used by major US trade partners –
the Euro (EUR), JapaneseYen (JPY), Pound Sterling (GBP), Canadian
Dollar (CAD), Swedish Krona (SEK) and Swiss Franc (CHF).
 Characteristic:
It is a weighted geometric mean of the dollar's value relative to following
select currencies:
o Euro (EUR), 57.6% weight
o Japanese yen (JPY) 13.6% weight
o Pound sterling (GBP), 11.9% weight
o Canadian dollar (CAD), 9.1% weight
o Swedish krona (SEK), 4.2% weight
o Swiss franc (CHF) 3.6% weight

The Index goes up when the U.S. dollar gains "strength" (value) when
compared to other currencies.

 Benefits:

o USD index is a reliable index of the value of the US dollar on the

global market. Based on USDX, traders can make predictions about
the future uptrend or decrease in the value of USD, the trend of
movement of currency pairs, and make Forex transactions more
efficient.
o Besides, analysts and traders often use USDX to determine the trend
of commodity markets related to USD, such as gold, silver, and
kerosene.
 Trend:

o From September 18 (93 points), the dollar on world markets come

back increasing after the Fed made positive statements about the US
economy and expected the US economy's recovery from the Covid-19
crisis to speed up.
o September 25, Dollar has reached the top for 2 months (94,58 points)
then falls slightly as markets await the first debate between President
Donald Trump and rival Joe Biden.
o Even after the First US President's Debate (September 29) there was
little lasting impact on the financial markets. When both candidates
spend most of their time making their own criticisms as well as
offending them, it is because it has disappointed Americans.
o On the evening of October 1, the House passed a $2.2 trillion
Democratic coronavirus stimulus plan that made USD prices rise
again.
o Until October 2, Donald Trump confirmed that Covid-19 infection
caused the USD price to fall.
o October 5 (the lowest place for 1 week – 93,45 points), when he was
discharged from the hospital and from there the DXY chart went up
again. Immediately upon discharge from the hospital after the Covid-
19 treatment, US President Donald Trump suddenly decided to stop
negotiating with Democrats on an additional economic bailout, asking
everyone to focus on the election and after he won't have the big
stimulus bill. This leads to DXY decline so far.
II. EUR & GBP:
A. Definition and characteristic:
 EUR
The euro (€) is the official
currency of 19 of the 27
member states of the
European Union. This
Definition group of states is known as
the eurozone or euro area
and includes about
343 million citizens as of
2019.
- divided into 100
cents  100 pence (penny)
- the second-largest
and the second-most
Characteristi
traded currency in
c
the foreign exchange
market after the US
dollar.
GBP
Sterling Pound is the official
currency of the United
Kimdom, Jersey, Guernsey,
the Isle of Man, Gibraltar,
South Georgia and the South
Sandwich Islands, The British
antarctic Territory and Tristan
da Cunha .
- is subdivided into
- the oldest currency still
in use today
- is the fourth most-
traded currency in the
foreign exchange
market, after the UDD,
the EUR and the JPY.

B. Analysis:

1. USD/EURO :

USD/EURO is the most traded currency pairs in the world are called “the
Majors” and the EURUSD leads this group as the most traded pair in the
world. This pair represents the world two largest economies and has faced
most volatility since the inception of the euro in 1999.
- 14/9-25/9: the cross exchange rate of USD/EUR starts to increase (0.8407-
0.8606) as the Euro is trading lower against the U.S. Dollar at the mid-
session after reversing earlier gains. The single-currency began to weaken
after Federal Reserve Chairman Jerome Powell said, as widely expected,
that the U.S. central bank would roll out an aggressive new strategy to lift
U.S. employment and inflation.
- 28/9: the trading volume of USD/EUR decreased dramatically. Traders need
more time to observed the Commision on Presidential debates held on 29/09
between the Joe Biden and Donald Trump.
- 2/10-5/10: On 2/10, Donald Trump was diagnosised positive with covid-19
with caused the USD price to fall.
 a decreased of USD/EUR rate from 0.8536 to 0.8485.
- 6/10: The USD/EUR cross exchange rate increased to 0.8526 as traders grew
increasingly optimistic about President Trump’s release from the hospital
following about with coronavirus and his subsequent return to the White
House. Additionally, investors are also waiting for developments in talks in
Washington about a coronavirus relief package after U.S. House Speaker
Nancy Pelosi on Sunday reported progress in the discussions.
- 08/10: the USD/EUR rate slightly decreased to 0.8507.

2. USD/GBP :

The Dollar- Pound is one of the oldest and most widely traded currency pairs
in the world.
- 23/09: the USD/GBP reached its peak at 0.7875 with the trade volume of
7781.
On 23/09, the Energy Information Administration's (EIA) Crude Oil
Inventories had recorded -1.639M (actual) of barrels of commercial crude oil
held by US firms compared to -2.2325 barrels (forcasted). The increase in
crude is less than expected, it implies greater demand and is bullish for crude
prices. Which means the USD benefited from crude oil’s precipitous decline
since the energy sector is a significant contributor to US GDP.
- 2/10-5/10: recorded a downward trend of USD/GBP from 0.7727 down to
0.7703. Donald Trump was diagnosised positive with covid-19 with caused
the USD price to fall.
- 6/10: USD was getting stronger. It went up to 0.7763 as traders grew
increasingly optimistic about President Trump’s release from the hospital
following about with coronavirus and his subsequent return to the White
House.
- 8/10: : the USD/GBP rate slightly decreased to 0.7730.

III. JPY & CNY:

1. USD/JPY:
 - The Japanese yen is the official currency of Japan. It is the third most
traded currency in the foreign exchange market after the United States
dollar and the Euro. It is also widely used as a reserve currency after the U.S.
dollar, the Euro, and the U.K. pound sterling.

- The USD/JPY is considered the 2nd most liquid currency pairing in

the FX markets, accounting for 13% of total transaction volume in the FX
market. During periods of political and economic uncertainty, the Yen is the
market's preferred choice.

- 18/09 : In August, the annual core rate of inflation fell by 0.4% in August,
which was in line with forecasts. Inflation had stalled in July. According to
the Ministry of Internal Affairs and Communication, the annual rate of
inflation softened from 0.3% to 0.2% in August.
In September 18th, the Japanese Yen was up by 0.17% at 104.56 against
the U.S Dollar.

- 02/10: The dollar soared and the safe yen also soared, hitting a week-
high on Friday after US President Donald Trump said he tested positive for
COVID-19 and put on quarantine.
 JPY rose about 0.3% at 105.27. The yen made even bigger gains against
other currencies, amid a broad shift away from risky assets and
commodities.

⇨ USD / JPY, highest since Monday at 105,79

18/09: the Japanese
Yen was up by
0.17% at 104.56 08/10: USD / JPY
against the U.S increased slightly by
Dollar. 0.07% to 106.03

02/10: Donald
Trump said he
tested positive for
COVID-19

2. USD/CNY:

- The yuan is the base unit of a number of former and present-

day currencies in Chinese. The dollar to yuan conversion has become one of
the most widely watched exchange rates. That's because these two countries
have the world's largest economies.
- This ratio is influenced by three forces- relative strength of the
countries’ economies, supply and demand, and yuan’s worth to the dollar.
 - 21/9 : The Chinese economy continues to recover from COVID-19,
the yuan has risen more than 6% from its lowest level in late May against the
greenback. However the dollar fell on Friday morning in Asia lead to USD /
CNY exchange rate decreased by 0.11% to 6.7556. Some investors are
expressing concerns about the rapid growth
- 28/09: September 28, 2020: The dollar fell lower on Monday, as risky
assets climbed after signs of economic recovery in China, but the greenback
remains near the highest level in China. two months as the number of
coronavirus infections continues to rise and political turmoil in the US
persists.
The USD / CNY decreased by 0.03% to 6,8101.
However, the weakening of the dollar may be temporary as the number of
Covid-19 infections continues to rise, while four US states in the Midwest
reported record increases in one day on Saturday. when the national
infection rate rose for the second week in a row.

- 08/10 : The dollar rose on Thursday morning in Asia, in hopes of

some U.S. stimulus, helping to improve investor sentiment toward risky
currencies.
 Fed officials, Eric Rosengren and Raphael Bostic, will deliver speeches
that could provide more clues about the Fed's internal debates.

USD/JPY USD/CNY

USD / JPY increased slightly USD / CNY exchange rate

by 0.07% to 106.03, with the remained at 6.7908. The
Safe Yen falling to a three-week Chinese market is closed for a
low of 106.11 per USD holiday.
overnight.

08/10: USD / CNY

20/09: USD / CNY exchange rate remained
exchange rate at 6.7908. The Chinese
decreased by market is closed for a
0.11% to 6.7556. holiday.

28/09: The USD /

CNY decreased by
0.03% to 6,8101.

FORECAST
(NOVEMBER 2020)

MAIN EVENT: US ELECTION

USD:

The 3 November 2020 election just around the corner, it would not be unusual
to expect the US dollar and other currencies to be reacting to election news and
developments on a daily basis at this stage.
The "strength of the U.S. dollar" is a popular topic within the campaign trail
rhetoric of nearly all candidates running in the presidential election. Promises of
job creation, national debt reduction and the creation of a strong national economy
are often the vehicles by which a candidate promises to deliver a strong dollar. It is
true that both the Republican and Democratic parties agree that a strong dollar is in
the best interest of the country. but we can see that the USD has benefited
significantly from President Trump’s policy mix of aggressive fiscal stimulus at
home and trade protectionism aboard The USD will go up if Trump Deafeat
Democrat Candidates.

EUR:

According to Presidential election cycles the US dollar has shown greater

gains when a Republican president holds the highest office compared with a
Democratic White House., there is a significant change in the value of the US
dollar on the day after election day is unlikely, but whether it will appreciate or
depreciate in the months after the polls will be largely dependent on which
candidate wins. If Trump wins, the impact on the euro (EUR/USD) would be a
lower US dollar. The EUR/USD will go down.

GBP:
 Traditionally, Democrats favour economic stimulus through increased
government spending and a "looser" monetary policy. On the other hand,
Republicans favour fiscal conservatism and a "tighter" monetary policy. The
differences are pronounced, and each approach has a vastly different impact upon
the values of the USD and its related currencies.Studies show that Democratic
presidencies in the U.S. are more likely to adopt an expansionary monetary policy,
while elected Republicans commonly favour stricter policy. Expansionary policy
can behave as a conduit for higher inflation rates and subsequent currency
devaluation, while fiscal conservatism is often associated with economic
stagnation. same as the EUR, If Trump Win, the GBP will decrease.

JPY:
 The Japanese Yen is the third most commonly traded currency in the world
after the US Dollar and the Euro.Unlike the EURO The Japanese yen tend to
increase during the global financial crisis. JPY have a upward trend in November.

CNY:
 When China does try to comment directly on US politics, it tends to pivot
around issues Beijing cares about — China’s handling of the coronavirus
compared to the US, or when Chinese officials used the George Floyd protests to
attempt to call out the US’s hypocrisy on Hong Kong and criticism of China for its
human rights abuses.
China likely to have more interested in Joe Biden to become the next US president
so if the winner is Trump, CNY will be decrease.

SUM UP FOR THE FORECAST OF NOVEMBER

USD: Increase
EUR: Decrease
GBP: Decrease
JPY: Increase
CNY: Decrease
REFERENCES:

1. USD/JPY: Live Exchange Rate Data Today, Trends, Charts, Historical

Statistics, Downloads and Comparisons – Exchange Rate UK.

2. What is the Us Dollar Index & Why is it Important ? – DailFX (30/10/2019).

3. EUR/USD Mid-Sessio Technical Analysis for October 5, 2020 – James

Hyerczyk.

4. Tradingview – U.S Dollar Currency Index – 1D – TVC.

5. Investopedia – USD by Akhilesh Ganti ( 11/9/2019 )

Member List (Group 4)

Name Responsibility
Collect data for USD&USD
Index
Vu Thuy Linh Ask for content
Answer Questions
Present
Design PowerPoint & Word
Le Thanh Vinh (leader) Answer Questions
Present
Collect data for EUR/GBP
Nguyen Phuong Uyen Present
Answer Questions
Forecast data
Present
Nguyen Thi Thanh Nhan
Creat Game
Answer Questions
Collect data for CNY/JPY
Nguyen Thi Huyen Trang Present
Answer Questions