Fundamental Analysis: Course Quiz

Course quiz

1. Which is the dominant fundamental driver of exchange rates?

   Company earnings Central bank interest rates and guidance The weather
2. Employment data comes in strong, but weaker than the consensus forecast. What is the likely immediate reaction?

   The currency rises because the data was strong The currency falls because the data missed expectations No reaction
3. US rates are expected to fall while eurozone rates are expected to hold. What tends to happen to EUR/USD?

   It falls It rises It is unaffected
4. A central bank has been raising rates and signals it is finished. What often happens to the currency?

   It strengthens further because rates are at their peak It weakens as the market begins pricing future cuts It becomes untradeable
5. A central bank holds rates but removes the phrase further increases may be appropriate from its statement. How is this read?

   Hawkish Dovish Irrelevant
6. Which central bank publishes the vote split with its decision?

   The Federal Reserve The European Central Bank The Bank of England
7. Global markets sell off sharply. Which currency would you expect to strengthen?

   AUD JPY NZD
8. Headline CPI is high because of an oil spike, but core CPI is falling. How is a central bank likely to read this?

   As a reason to raise rates sharply As transitory; underlying inflation is easing As irrelevant
9. Payrolls beat the forecast, but average hourly earnings come in far below expectations. What is the mixed reading?

   Purely hawkish Jobs strong but wage pressure easing, which softens the inflation case Purely dovish
10. A services PMI prints 48.5. What does this indicate?

    Expansion Contraction A recession has been declared
11. Why do central banks watch wage growth so closely?

    Because wages are taxed Because wages feed services inflation and can make inflation self-sustaining Because wages set exchange rates directly
12. The forecast is 3.2 percent, the previous was 3.4 percent, and the actual is 3.4 percent. What is the surprise?

    No surprise; it matched the previous A positive surprise of 0.2 percentage points against the forecast A negative surprise
13. Country A: 6 percent rate, 5 percent inflation. Country B: 4 percent rate, 2 percent inflation. Which has the higher real rate?

    A B They are equal
14. US two-year yields rise sharply relative to German two-year yields. What does this suggest for EUR/USD?

    Upward pressure on EUR/USD Downward pressure on EUR/USD No relationship
15. Which reading of CPI do central banks weight most?

    Headline, year on year Core, excluding food and energy The figure for oil
16. Hawkish guidance usually:

    Weakens the currency Strengthens the currency Has no effect
17. Which currency is a safe haven?

    AUD CHF NZD