Bloomberg Toolkit Analyzing FX Forecasts
Terminal Activity
Analyzing FX Forecasts
Learn how to use Bloomberg to analyze FX forecasts
Bloomberg Toolkit Analyzing FX Forecasts
Table of Contents
Terminal Activity: Analyzing FX Forecasts 3
Activity Description ..................................................................................................................................................................................... 3
Learning Objectives .................................................................................................................................................................................... 3
Materials ...................................................................................................................................................................................................... 3
Time ............................................................................................................................................................................................................. 3
Activity Instructions ..................................................................................................................................................................................... 3
Functions For This Activity 5
TOP <GO> | Top News ............................................................................................................................................................................... 5
FXFC <GO> | FX Forecasts ........................................................................................................................................................................ 5
Bloomberg Help ......................................................................................................................................................................................... 6
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Bloomberg Toolkit Analyzing FX Forecasts
Terminal Activity: Analyzing FX Forecasts
Activity Description
The purpose of this class activity is to teach students how to use Bloomberg to analyze FX forecasts to understand their importance.
The activity is designed to help students develop their data analysis and critical thinking skills and to enable them to apply their
knowledge of economics to real-world scenarios.
Learning Objectives
At the end of this activity, students will be able to:
• Explain the importance of FX forecasts
• Use the FX Forecasts function and Bloomberg News on the Bloomberg Terminal to analyze FX data
• Identify and analyze different statistical measures used to evaluate FX forecasts
• Compare and contrast FX forecasts for different currency pairs
Materials
• Bloomberg Terminal
• Student Handouts
Time
Approximately 75 minutes
Activity Instructions
Introduction: (15 minutes)
1. Begin the lesson by introducing the importance of FX forecasts in financial markets.
2. Explain the impact of FX surprises on financial markets.
3. Discuss how FX forecasts affect the financial markets of a country.
Activity: Using the FX Forecasts Function (45 minutes)
1. Demonstrate how to use the FX Forecasts (FXFC) function and the Top News (TOP) function on the Bloomberg
Terminal to analyze FX data.
2. Guide students on how to use the functions to compare and contrast FX forecasts for different currency pairs. Explain
to students that news should be used as a guide (e.g., TOP Euro, TOP dollar, TOP rand, Top Australian dollar)
3. Show students how to identify and analyze different statistical measures used to evaluate FX forecasts.
4. Small Group Activity: Have students work in pairs or small groups to locate FX data for a currency pair of their choice
using the FXFC and TOP News functions. Encourage them to use the HELP function to learn more about the functions.
As they work together, they should answer the following guiding questions:
• What types of data can be found using the FXFC function?
Potential answer: Current and historical foreign exchange forecasts by currency and region, showing spot
and future quarters and years. It also displays a median consensus forecast that shows the performance and
potential usefulness of forecasts in general, as well as forward data, consensus and supporting
documentation, and ranking data based on a scoring methodology that reflects a forecaster's performance
over the current quarter and the previous three quarters.
• Imagine you work on a trading desk and your boss asks you to find out the forecast for the Mexican peso and
how it is different from the forecast for the Brazilian real. Where can you go on the Bloomberg Terminal to
find the information?
Potential answer: You can use TOP Mexican peso and TOP Brazilian real on the Bloomberg Terminal to find
relevant analysis and forecasts.
• How can you compare FX forecasts for different currency pairs using the FXFC function and TOP News?
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Bloomberg Toolkit Analyzing FX Forecasts
Potential answer: The FXFC function allows you to compare FX forecasts for different currency pairs by
displaying ranking data based on a scoring methodology that reflects a forecaster's performance over the
current quarter and the previous three quarters. You can navigate between ranking data by currency or by
region and set the currency, period, and range from the drop-down menus.
• What are some factors to consider when analyzing FX data for a currency pair? How do economists come up
with forecasts? Hint: Use Bloomberg News to guide your answer.
Potential answer: Some factors to consider include the current economic conditions, historical trends,
political and social environment, potential impact of external shocks like earthquakes, extreme weather such
as droughts, external factors, such as global events or policy changes, and the quality and reliability of the
forecast data and its source.
• How can you use FX data to make informed investment decisions?
Potential answer: FX data provide insights into the current and future performance of a currency pair and its
impact on financial markets. This can help investors identify opportunities and manage risks, such as deciding
on the optimal timing for entering or exiting a position, selecting the most appropriate currency pairs to trade
based on their risk and reward characteristics, and hedging against currency risk.
• Imagine you are a financial analyst. Use the FXFC function and Bloomberg news on the terminal to examine
the current foreign exchange rates and recent currency-related news items. Then, prepare a brief analysis
explaining how potential fluctuations in the currency market could impact the returns for both a fixed income
manager and an equities manager. Be sure to provide specific examples from the real-time data and news
you have examined on the terminal to illustrate your points.
Possible answer:
The answer will vary based on current exchange rates.
For a fixed income manager, this could impact the returns on investments in foreign bonds. If the dollar
strengthens, the returns on foreign bonds would decrease when converted back to dollars, leading to a
potential loss.
For an equities manager, this could impact the returns on investments in foreign companies. If a U.S. based
equities manager has investments in European companies and the dollar strengthens against the euro, the
value of those investments would decrease when converted back to dollars.
In addition, Bloomberg news can provide insights into current economic events that could influence currency
values. For example, if there is news of political instability in a country, its currency might depreciate, which
could further impact the returns of both the fixed income and equities manager.
5. The students will present their findings to the class and discuss the implications of the FX data on financial markets.
Conclusion: (15 minutes)
Summarize the key takeaways from the lesson, including the importance of FX forecasts in financial markets. Encourage the
students to continue exploring the Bloomberg Terminal to further their understanding of the financial markets.
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Bloomberg Toolkit Analyzing FX Forecasts
Functions For This Activity
TOP <GO> | Top News
TOP <GO> displays headlines of the day's top worldwide stories from Bloomberg News® along with editorially curated charts and
digests, so you can access the most important news in one place.
Note: When you enter a different TOP shortcut (e.g., TOP Euro, TOP South African Rand, TOP Brazilian Real, TOP British Pound,
TOP Japanese Yen etc.), the results screen of the News & Research Menu (N) function appears.
FXFC <GO> | FX Forecasts
FXFC evaluates foreign exchange forecasts from individual forecast providers to show relative performance. A median consensus
forecast shows the performance, potential usefulness of forecasts in general, and naive forecasting strategy using the FX forward,
so you can measure and rank the overall performance of foreign exchange forecasts. FXFC provides transparency for individual
contributors' forecasts, so you can follow the trends you think most accurately fit the direction of the market. You can chart data and
display a histogram, allowing you to visually depict FX forecasting trends.
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Bloomberg Toolkit Analyzing FX Forecasts
Bloomberg Help
Each function has a comprehensive, searchable online user guide designed to answer common questions and describe key
functionality. From within any function, press <HELP> once or click the HELP button to access that function’s Help Page.
Get hints as you go. On any Bloomberg function, you can position your mouse over key items for more information.
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Bloomberg Toolkit Analyzing FX Forecasts
Student Handout
Analyzing FX Forecasts
Bloomberg Toolkit Analyzing FX Forecasts
Table of contents
Activity Goals 3
Activity Instructions 3
Functions For This Activity 5
Bloomberg Help 6
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Bloomberg Toolkit Analyzing FX Forecasts
Activity Goals
• Explain the importance of economic forecasts
• Use the Economic Forecasts function on the Bloomberg Terminal to analyze economic data
Activity Instructions
Introduction
Foreign exchange (FX) forecasts play a crucial role in financial markets. They can impact market movements and provide valuable
insights into the performance of a currency pair. In this activity, you will learn how to use the FX Forecasts (FXFC) function and the TOP
news function on the Bloomberg Terminal to analyze FX data, compare and contrast FX forecasts for different currency pairs, and
identify and analyze different statistical measures used to evaluate FX forecasts.
1. Begin by typing FXFC in the command on the Bloomberg Terminal. Press <GO> or select FXFC.
2. Familiarize yourself with the function's interface and menu options. Use the HELP function if necessary.
3. Identify a currency pair of your choice and use the FXFC function to locate FX data for the pair.
4. Use Bloomberg News function TOP to find relevant analysis and forecasts. Type TOP and the currency you want to see. For
example, TOP Japanese Yen.
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Bloomberg Toolkit Analyzing FX Forecasts
5. Work with your partner or small group to answer the following guiding questions:
a. What types of data can be found using the FXFC function?
b. Imagine you work on a trading desk and your boss asks you to find out the forecast for the Mexican peso and how it is
different from the forecast for the Brazilian real. Where can you go on the Bloomberg Terminal to find the
information?
c. How can you compare FX forecasts for different currency pairs using the FXFC function and TOP News?
d. What are some factors to consider when analyzing FX data for a currency pair? How do economists come up with
forecasts? Hint: Use Bloomberg News to guide your answer.
e. How can you use FX data to make informed investment decisions?
f. Imagine you are a financial analyst. Use the FXFC function and Bloomberg news on the terminal to examine the
current foreign exchange rates and recent currency-related news items. Then, prepare a brief analysis explaining how
potential fluctuations in the currency market could impact the returns for both a fixed income manager and an equities
manager. Be sure to provide specific examples from the real-time data and news you have examined on the terminal
to illustrate your points.
6. Present your findings to the class and discuss the implications of the FX data on financial markets.
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Bloomberg Toolkit Analyzing FX Forecasts
Functions For This Activity
TOP <GO> | Top News
TOP <GO> displays headlines of the day's top worldwide stories from Bloomberg News® along with editorially curated charts and
digests, so you can access the most important news in one place.
Note: When you enter a different TOP shortcut (e.g., TOP Euro, TOP South African Rand, TOP Brazilian Real, TOP British Pound,
TOP Japanese Yen etc.), the results screen of the News & Research Menu (N) function appears.
FXFC <GO> | FX Forecasts
FXFC evaluates foreign exchange forecasts from individual forecast providers to show relative performance. A median consensus
forecast shows the performance, potential usefulness of forecasts in general, and naive forecasting strategy using the FX forward,
so you can measure and rank the overall performance of foreign exchange forecasts. FXFC provides transparency for individual
contributors' forecasts, so you can follow the trends you think most accurately fit the direction of the market. You can chart data and
display a histogram, allowing you to visually depict FX forecasting trends.
5
Bloomberg Toolkit Analyzing FX Forecasts
Bloomberg Help
Each function has a comprehensive, searchable online user guide designed to answer common questions and describe key
functionality. From within any function, press <HELP> once or click the HELP button to access that function’s Help Page.
Get hints as you go. On any Bloomberg function, you can position your mouse over key items for more information.
