How IBs reprice their currency rates
Hello Wall Street Oasis,
I recently turned research analyst at a global macro hedge. Now comes the part in my career where I have to figure out how currencies move. Indeed, I'm not attending to summarize the 20 years of knowledge in Soros' head. Rather, I like to question those in IBs on the interaction between research, forecasts and market makers (MM).
Essentially, this is the question - nearing the announcement date of a key economic event, what is the information flow between personnel in the bank which will eventually lead to exchange rate repricing?
Specifically,
1. Do IBs rely on their own research teams to give a forecast to their MM who in turn reprice their rates?
2. Do MMs solely rely on Bloomberg and then reprice the rates?
3. When repricing does occur, what portion of it is due to forecast and what portion due to managing risk of existing orders? 20/80, 50/50 etc.
4. I do understand that AT the event, ie i/r cut, MMs have to, in a micro way, react to prices that are fluctuating at present. I'm questioning more on repricing leading to the event.
I appreciate any feedback, especially those in IBs! Gosh, I could use 2 years of IB experience right now.
Cheers,
Will
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