Understanding Market Jargon Key Currency Nicknames
Previously, we saw some additional economic indicators as well as factors affecting market
volatility. In this lesson we’ll provide an overview of some key market jargon and currency
nicknames.
Who is a Hawk?
A hawk is a representative of the central bank who is inclined to favour higher interest rates
and is concerned about excessive inflation. Hawks may become more powerful inside the
central bank and force an increased tightening of monetary policy, which might strengthen
the corresponding currency.
What does dove refer to?
A central bank official that favours lower interest rates by focusing on growth. Doves may
become more powerful inside the central bank at times where the bank’s strict policy
practices have met their goals of bringing inflation back to target, thus a pivot towards
easier of monetary policy practices is favoured. The act of lowering interest rates tends to
yield a negative reaction for the nation’s currency.
What is a Bear Market?
Sequential and systematic fall of prices are a tell-a-tale sign of a bear market. The act of a
bear swiping with its claws downward is the source of the term.
What is a Bull Market?
Sequential and systematic rise of prices are a tell-a-tale sign of a bull market. The upward
pushing motion a bull creates when striking with its horns is where the term originates.
Safe-haven assets
These are assets that investors prefer and flee towards to in times of economic and
geopolitical uncertainty in order to safeguard their possessions amidst volatile market
conditions. Such asset destinations are the US dollar (USD), gold, bonds, and the Japanese
yen (JPY) and the Swiss Franc (CHF).
All about Quantitative Easing
The unconventional monetary policy known as quantitative easing, or QE, is employed by
central banks to boost the money supply by acquiring assets at a time when interest rates
are already extremely low and cannot be lowered any further. It is the artificial creation of
money which is intended to be pumped in the economy in order to keep productivity and
growth going. Increasing QE is typically seen as a monetary policy loosening technique,
which typically hurts the currency of that nation, since it ‘dilutes’ the money supply.
Popular Currency Slang
The Euro is referred to as the Common Currency or the Single Currency, while the US Dollar
is frequently called the Greenback in market jargon. The Canadian Dollar is referred to as
the Loonie, and the British Pound is commonly called Sterling or just the Pound. In the same
way, the New Zealand Dollar is known as the Kiwi and the Australian Dollar as the « Aussie. »
Our goal in each lesson was to provide a basic understanding of market drivers although
there are a lot of other factors as well, which could mean that the real market dynamics are
more complex than what is described.