Forex Fundamentals
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FX Mechanics

FX mechanics are the rules every currency trade runs on: which currency a pair quotes in which, what buying a pair really means, and how the interest rate gap between two currencies pulls on their price. These guides explain each one with worked examples.

The guides

  • What Is Base and Quote Currency?

    What is base and quote currency? The first and second currency of a pair: the price is how much of the quote one unit of the base costs, and how to read it.

  • What Is an Interest Rate Differential?

    What is an interest rate differential? The gap between the rates of a pair’s two currencies: how to work it out on real 2024 rates, and how it becomes swap.

  • Anatomy of a Rate Differential

    Anatomy of a rate differential: why the expected gap moves a pair more than today’s, how inflation makes a nominal gap real, and when the gap gives way.

  • Currency Pairs and Relative Pricing

    Currency pairs and relative pricing: a pair is one currency priced in another, so every move has two sides. How to tell which side moved and how crosses work.

Where to see it in the data