Hyperinflation

Very high and self sustaining inflation levels. One definition being the period while inflation exceeds 50% until it has dropped below that level for 12 months.

Housing Starts

Housing Starts are a measure of the number of residential units on which construction is begun each month.

Holder

Same as buyer.

Hit the Bid

Acceptance of purchasing at the offer or selling at the bid.

Historical Volatility

The annualized standard deviation of percentage changes in futures prices over a specific period. It is an indication of past volatility in the marketplace.

HIBOR

Hong Kong Inter-bank Offered Rate.

Hedge

The purchase or sale of options or futures contracts as a temporary substitute for a transaction to be made at a later date. Usually it involves opposite positions in the cash or futures or options market.

Head and Shoulders

SA pattern in price trends which chartists consider indicates a price trend reversal. The price has risen for some time, at the peak of the left shoulder, profit taking has caused the price to drop or level. The price then rises steeply again to the head before more profit taking causes the price to drop to around the same level as the shoulder. A further modest rise or level will indicate that a further major fall is imminent. The breach of the neckline is the indication to sell.

GTC

See Good until canceled.

GNP Deflator

Removes inflation from the GNP figure. Usually expressed as a percentage and based on an index figure.

Gross National Product

(GNP) Gross domestic product plus "factor income from abroad" - income earned from investment or work abroad.

Gross

(GTC) Before deduction of tax.

Gold Standard

A monetary system that backs its currency with a reserve of gold, and allows currency holders to convert their currency into gold. The U.S. went off the gold standard in 1971.

Going Short

The selling of a currency or instrument not owned by the seller.

Going Long

The purchase of a stock or commodity for investment or speculation.

GLOBEX

A system for global after hours electronic trading in futures and options developed by Reuters for CME and CBOT for use in conjunction with various exchanges around the world.

Gamma

The rate at which a delta changes over time or for one unit change in the price of the underlying asset.

G10

G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.

G7

The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy.

G5

The Group of Five. The five leading industrial countries, being US, Germany, Japan, France, UK.

FX

Foreign Exchange.

Fundamentals

The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.

Front Office

The activities carried out by the dealer , normal trading activities.

Free Reserves

Total reserves held by a bank less the reserves required by the authority.

Forward Rate

Forward rates are quoted in terms of forward points, which represents the difference between the forward and spot rates. In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange rate. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefore the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.

Forward Rate Agreements

The FRA is an agreement between two parties that determine the interest rate that will apply to a notional future loan or deposit of an agreement.

Forward Outright

A commitment to buy or sell a currency for delivery on a specified future date or period. The price is quoted as the Spot rate minus or plus the forward points for the chosen period.

Forward Operations

Foreign exchange transactions, on which the fulfillment of the mutual delivery obligations is made on a date later than the second business day after the transaction was concluded.

Forward Maturities

Trading days on which days contracts can be transacted later than the spot date.

Forward Margins

Discounts or premiums between spot rate and the forward rate for a currency. Normally quoted in points.

Forward Forward

A forward / forward deal is one where both legs of the deal have value dates greater than the current spot value date.

Forward Deal

A deal with a value date greater than the spot value date.

Forward Cover Taking

Forward contracts to protect against movements in the exchange rate.

Forex

Foreign Exchange.

Foreign Exchange

The purchase or sale of a currency against sale or purchase of another.

FOMC

Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates etc.

Floor

(1) An agreement with a counterparty that sets a lower limit to interest rates for the floor buyer for a stated time. (2) A term for an exchanges trading area (cf. screen based trading), normally the trading area is referred to as a pit in the commodities and futures markets.

Floating Exchange Rate

An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a dirty float.

Flexible Exchange Rate

Exchange rates with a fixed parity against one or more currencies with frequent revaluation. A form of managed float.

Fixing

A method of determining rates by normally finding a rate that balances buyers to sellers. Such a process occurs either once or twice daily at defined times. Used by some currencies particularly for establishing tourist rates. The system is also used in the London Bullion market.

Fixed Exchange Rate

Official rate set by monetary authorities. Often the fixed exchange rate permits fluctuation within a band.

Fixed Dates

he monthly calendar dates similar to the spot. There are two exceptions. For detailed description see value dates.

Fine Rate

The price given in response to a request for a rate at which the quoting party is willing to execute a deal for a reasonable amount for spot settlement. Screen quotes are indicative. Quotes on matching systems are normally firm depending on systems requirement to reconfirm rate prior to completing matching.

Financial Future

A futures contract based on a financial instrument.

Federal Reserve System

The central banking system of the US comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board. Membership of the Fed is compulsory for banks chartered by the Controller of Currency and optional for state chartered banks.

Federal Reserve Board

The board of the Federal Reserve System, appointed by the US President for 14 year terms, one of whom is appointed for four years as chairman.

Federal Open Market Committee

See FOMC.

Fed

The United States Federal Reserve. Federal Deposit Insurance Corporation Membership is compulsory for Federal Reserve members. The corporation had deep involvement in the Savings and Loans crisis of the late 80s.

Fed Funds

Cash balances held by banks with their local Federal Reserve Bank. The normal transaction with these funds is an inter bank sale of a Fed fund deposit for one business day. Straight deals are where the funds are traded overnight on an unsecured basis.

Fed Fund Rate

The interest rate on Fed funds. This is a closely watched short term interest rate as it signals the Feds view as to the state of the money supply.

Fast Market

Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.