TO GET THE COMPLETE JOURNAL/THESIS FOR TOPIC BELOW,
CALL: 08168759420, 08068231953
WHATSAPP: 08137701720
A NOTE ON FORECASTING EXCHANGE RATES USING A CLUSTER TECHNIQUE
Abstract: In this note, we propose a cluster method as a simple predictive tool to forecast exchange rates (specifically the Japanese Yen and the British Pound against the US Dollar). The general goal in this study is two-fold. First of all, we verify whether or not we can accurately predict the exchange rate movements using the suggested method. Secondly, we use the generated sign predictions to build a simple trading strategy and check if we can obtain above-normal profits in the foreign exchange market. Our results reveal a sign forecasting ability for one-period-ahead which is lost when more periods ahead are considered. On the other hand, our simple trading strategy does not obtain above-normal profits.
Keywords: cluster forecasting method; exchange rate forecasting; foreign exchange market; trading strategies.