Many analyses often refer to “long” and “short”, which in fact refers to forecasting the exchange rate to rise or fall. For example, a bullish view on the exchange rate of the U.S. dollar against the Japanese yen indicates an increase in the U.S. dollar exchange rate, and a bearish view on the U.S. dollar against the Japanese yen exchange rate indicates a decrease in the U.S. dollar exchange rate. But when reading these analyses, readers must figure out which currency is bullish or bearish against another currency. Once the sequence is wrong, the opposite conclusion may be drawn.

There are many differences between the international currency market and the familiar stock market in terms of quotations. For example, in the stock market, the quotations of the market watched rose as red and fell as green. However, in the quotations of the foreign exchange market, green represents the rise and red represents the fall. Another example is the stock market that usually calculates the rise and fall of stock prices in percentages, but in the foreign exchange market, everyone uses “points” to express changes in exchange rates. Therefore, as an investor, you should first have a necessary understanding of the commonly used expression methods in the market.

“Points” in foreign exchange quotes

According to international market practice, the smallest unit in a quotation is 1% of the smallest value unit of the quotation currency, which is usually called a “point”. If the smallest unit of value of the US dollar is US cents, the smallest unit of quotation of other currencies against the US dollar is 0.0001 US dollars. When the exchange rate of the euro against the US dollar rises from 0.8800 to 0.8900, it is usually called the euro rose by 100 points or the US dollar fell by 100 points. However, since the smallest unit of the yen is the yuan, the smallest unit in the quotation against the yen is 0.01 yen. When the exchange rate of the dollar against the yen rose from 131.60 to 132.60, the market said that the exchange rate of the dollar against the yen rose by 100 points or the yen fell by 100 points against the dollar. The quotations of most other currencies against the yen are basically the same. For example, the euro against the yen is expressed as 116.70. When the exchange rate rises by 100 points, some people will call this the euro rose by 1 yen.

“Long” and “Null” in analysis

Many analyses often refer to “long” and “short”, which in fact refers to forecasting the exchange rate to rise or fall. For example, a bullish view on the exchange rate of the U.S. dollar against the Japanese yen indicates an increase in the U.S. dollar exchange rate, and a bearish view on the U.S. dollar against the Japanese yen exchange rate indicates a decrease in the U.S. dollar exchange rate. But when reading these analyses, readers must figure out which currency is bullish or bearish against another currency. Once the sequence is wrong, the opposite conclusion may be drawn.