Home / Economics / A note on forecasting exchange rates using a cluster technique

A note on forecasting exchange rates using a cluster technique

 

Table Of Contents


Chapter ONE

1.1 Introduction
1.2 Background of Study
1.3 Problem Statement
1.4 Objectives of Study
1.5 Limitations of Study
1.6 Scope of Study
1.7 Significance of Study
1.8 Structure of the Research
1.9 Definition of Terms

Chapter TWO

2.1 Overview of Exchange Rate Forecasting
2.2 Traditional Methods in Exchange Rate Forecasting
2.3 Modern Techniques in Exchange Rate Forecasting
2.4 Cluster Techniques in Forecasting
2.5 Applications of Cluster Techniques in Other Industries
2.6 Comparison of Cluster Techniques with Other Forecasting Methods
2.7 Challenges in Exchange Rate Forecasting
2.8 Opportunities in Exchange Rate Forecasting
2.9 Future Trends in Exchange Rate Forecasting
2.10 Summary of Literature Review

Chapter THREE

3.1 Research Design
3.2 Research Approach
3.3 Data Collection Methods
3.4 Sampling Techniques
3.5 Data Analysis Methods
3.6 Validity and Reliability
3.7 Ethical Considerations
3.8 Limitations of the Research

Chapter FOUR

4.1 Overview of Findings
4.2 Descriptive Analysis of Data
4.3 Cluster Analysis Results
4.4 Interpretation of Cluster Analysis
4.5 Comparison with Traditional Forecasting Methods
4.6 Implications of Findings
4.7 Recommendations for Practice
4.8 Recommendations for Further Research

Chapter FIVE

5.1 Summary of Findings
5.2 Conclusion
5.3 Contributions to the Field
5.4 Implications for Future Research
5.5 Conclusion and Recommendations

Project 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.

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