Tag Archives: behavioural finance

Bitesize: Periodicity of GBP/USD trading activities

Jihyoung Yi.

FX assets are traded continuously across the globe.  The majority of GBP/USD trades, however, are executed during typical trading hours in London and New York (NY). Saravelos and Grover (2016) find that: (i) FX moves during these hours are most highly correlated to the overall daily move; and (ii) there is statistically significant periodicity where GBP tends to depreciate in the London morning and appreciate in the NY afternoon against the US dollar.

Continue reading

Comments Off on Bitesize: Periodicity of GBP/USD trading activities

Filed under Bitesize, Currency, Financial Markets, Financial Stability

Rational and Behavioural Drivers of Financial Markets: the case of ‘search for yield’

Silvia Pepino.

Rational and behavioural factors can coexist in financial markets. The ‘search for yield’ (or ‘reach for yield’) observed in financial markets in recent years is a striking manifestation of the interaction of rational and behavioural factors. During an extended period of low interest rates and volatility, market participants have displayed a tendency to seek higher returns by investing in securities that carry higher credit, liquidity or duration risk. This tendency to search for yield appears to have been motivated by a mix of rational fundamental considerations, business and regulatory constraints, and behavioural biases.

Continue reading

Comments Off on Rational and Behavioural Drivers of Financial Markets: the case of ‘search for yield’

Filed under Financial Markets, Financial Stability, Macroprudential Regulation, Monetary Policy