Tip #2001-9: Bloomberg Currency Monitor
The trend is your friend. Follow the trend. This old
market adage is particularly important to currency traders. Knowing whether a
specific currency is strengthening or weakening against the dollar is vitally
important to foreign exchange traders. Also being able to compare the price
movement of several currencies for a specific period of time can be an
important factor in currency arbitrage and controlling risk. For example, in
the past 2 weeks the dollar is down 2% against the Mexican peso but up 8%
against the Euro. Being able to see information displayed this way is what
creates profitable trading and investment opportunities.
We have created a mini-app which allows you to
identify the trends in the foreign exchange markets. It combines Excel’s
functions and charting features with Bloomberg’s real-time and historical data
to create a powerful currency monitoring model. All you need to do is to enter
a number in a cell to indicate how many days back you want to go to compare the
price of a group of currencies with the current real-time price. The model is a
great example of how to add a decision-making dimension financial information.
The model is composed of two worksheets. The ForexModel
worksheet contains the calculations while real-time and historical
data are on the BLBData worksheet. In designing financial
models for our clients, we have found it is good practice to keep
real-time and historical data on a separate worksheet and reference
these cells in the formulas of your model. Not only does this design
make it a great deal easier to find errors and make changes. No
macrocode is used. Excel’s index function is what finds historical
value for a particular currency on a specific date. We inserted
comments to provide more explanation.
If you are a Bloomberg subscriber, select Yes to
update the links and you will be able to use the application as a real-time
working model which updates continuously.
If you are not a Bloomberg subscriber, just select No
when asked to update links to information in another workbook. The model will
still work, the chart will change and you will be able to see how it works but
the real-time and historical data will not be updated.
Contact us if you would like to employ our services to
help you enhance this model or help you design customized application using
Bloomberg data.
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