Your team works for a renowned FX trading company, Snowy River Ltd. The company specializes in trading major currencies such as the Australian Dollar (AUD), British Pound (GBP), Canadian Dollar (CAD), Euro (EUR), Japanese Yen (JPY), New Zealand Dollar (NZD), Swiss Franc (CHF)and US Dollar (USD). The company also trades various foreign exchange-related derivatives for
its clients.

In addition, it provides general advice to other clients who trade for themselves. The firm’s chief trading executive, Jayden Yap, has requested your team’s expertise in trading foreign currencies in order to improve the firm’s trading strategy and profits. You have been asked to prepare a detailed report in this regard. In your report, you must address the following scenarios:

Use the three/four market views developed by your team in stage 1, and use the market views to devise speculation strategies that enable your organization to take advantage of your predicted changes in exchange rates. You should specify which currencies you will buy or sell. As part of your strategy, you must create a portfolio and this portfolio will comprise of
the currency pairs analyzed in your market view.

The senior management has allocated you 400,000,000 units of each currency as the initial balance for your speculation strategy if you are speculating on AUD, GBP, CAD, EUR, NZD, CHF, or USD and 25,000,000,000 units if you are speculating on JPY. For instance, if you are speculating on AUD/EUR and decided to short the EUR, then you have been allocated
400,000,000 EURs for this purpose. The corresponding long/short position should be calculated using bid/ask rates provided in Table 1.

Please note that you must speculate on ALL currency pairs based on your stage 1 market view. You must then take long and short positions in the respective currencies in accordance with your market view as a price taker. In the report, you are requested to provide a brief summary of your market views before demonstrating your long/short speculation strategy.

These long and short positions will constitute your portfolio’s current opening position. Based on your initial position you must choose the most appropriate quotations among Bank A, B, and C in Table 1, estimate the opening AUD value of your portfolio using the corresponding mid rates, and update your position summary table below with your speculative position.

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