Western Union Business Solution is rebranding into CONVERA Read more >



Account balance: Account balance is the money left in a savings or checking account including uncleared checks and pending transactions. An account in overdraft (i.e. below zero) is a debt. Regular bills e.g., water, heating or mortgage must be taken into account. Hence the account balance will fluctuate according to the dates in which these debits leave the account.

Annual percentage rate (APR): Annual percentage rate (APR) is the percentage of interest charged per annum on a loan and paid to investors, including fees and costs relating to the loan. This is the figure to compare with other lenders. NOT to be confused with compound interest, as this is not taken into account.

Annual percentage yield (APY): Annual percentage yield (APY) is the percentage of interest that reflects compounding interest. This is calculated periodically and immediately added to the balance. This increases the balance continually, with the balance and the interest getting bigger all the time.

AUD: AUD is also known as the Australian Dollar.


Bear Market: When a market or financial instrument is on a sustained downward trajectory, with little optimism for traders that we may see a rally or recovery.

Bearish and Bullish: Bears are traders who believe that a market, exchange rate or financial instrument is heading in a downward path. They may believe that a currency will depreciate. Bullish traders believe that a market is going upwards.

Black Swan Event: A phrase often used in finance to describe an unforeseen event that has potentially severe and widespread consequences.

BOE: The BoE is short for the ‘Bank of England’. This is the central bank of the United Kingdom which is responsible for the setting of the UK monetary policy and UK interest rates.

Budget Rate: The exchange rate that a company uses to draft budgets and establish business objectives.


Cable: a slang term used for GBP/USD. It is named after the Transatlantic Cable under the Atlantic Ocean.

CAD: CAD - Canadian Dollar.

Carry Trade: A carry trade is a strategy where an investor borrows money at a low interest to invest in an asset with a potentially higher return. This is very common within the foreign exchange market.

Central Bank Monetary Policy: The macroeconomic policy issued and managed by the central bank of a country. It involves the management of money supply and interest rates and is the demand side economic policy used to achieve objectives like higher inflation and growth, or lower unemployment.

Cross Currency: A pair of currencies traded in foreign exchange that does not include the USD. One foreign currency is traded for another without having to first exchange the currencies into USD.

Currency Floor: This is like a Currency Peg but in this instance the exchange rate is not fixed at a certain price. Instead, a central bank will buy or sell currency (FX intervention) to ensure the exchange rate does not fall below ‘a floor’ or a certain price. For example, in 2011 the SNB introduced a 1.20 floor on the EUR/CHF exchange and used intervention to keep the price above that level.

Currency Intervention: (Also known as FX market intervention) is a monetary policy tool used to influence an exchange rate. It occurs when a government or central bank buys or sells foreign currency in exchange for their own domestic currency, generally with the intention of protecting the economy.

Currency Options: A contract that gives the buyer the right (but not the obligation), to buy or sell a certain currency at a specified exchange rate on or before a specified date. For this right, a premium is paid to the seller.

Currency Pairing: When we talk about a currency becoming stronger or weaker, we are comparing it to another currency. For example, AUD against JPY or USD.

Currency Peg: A governmental policy of fixing the exchange rate of its currency to that of another currency. It can also be referred to as a fixed exchange rate or pegging. For example, many countries who export oil to the US, peg their currency to the US Dollar to mitigate fluctuations.


Dovish: Sometimes, dovish sentiment is relative to market expectations. For example, if traders expect a central bank to increase interest rates, yet it expresses concerns about inflation which prevents a hike, the statement can be interpreted as dovish.


ECB: European Central Bank.

Exotics: All the currencies that are not majors or minors which represent smaller or emerging economies. For example, HKD, MXN, IDR.


Financial Instrument: A contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

FOMC: The FOMC is a shortening of Federal Open Market Committee. This is a branch of the central bank in the US that oversees US monetary policy and setting US interest rates.

Forex: Foreign exchange.

Forward Contract: A private agreement between two parties giving the buyer an obligation to purchase an asset (and the seller an obligation to sell an asset) at a set price at a future point in time.

FX Exposure/ Foreign Currency Exposure: The risk a company undertakes when making financial transactions in foreign currencies. All currencies can experience periods of high volatility which can adversely affect profit margins if suitable strategies are not in place to protect cash flow from sudden currency fluctuations.


Government Fiscal Policy: The way a government manages its spending levels and tax rates in an economy to influence growth and employment. It is the sister strategy to monetary policy through which a central bank influences the economy’s money supply.


Hawkish: A central bank with hawkish sentiment is one that hints about future interest rate increases. It can also be used to describe a member of a central bank who intends to vote for a future interest rate hike. Hawkish statements or sentiment usually have a positive effect on a currency. Being hawkish is the opposite of being dovish.

Hedge Position: The customers hedge position refers to the total value of forward contracts and option products booked with a broker at any one time.

Hedging: A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the in the prices of commodities, currencies, or securities.


Income: is money (or some equivalent value) that a person or business receives, usually in exchange for providing a good or service or through investing capital. Income is used to fund day-to-day expenditures. Investments, pensions, and Social Security are primary sources of income for retirees. On an individual basis, income is most often received in the form of wages or salary. Business income can refer to a company's remaining revenues after paying all expenses and taxes.

Inflation: is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over time. It is the rise in the general level of prices where a unit of currency effectively buys less than it did in prior periods. Often expressed as a percentage, inflation thus indicates a decrease in the purchasing power of a nation’s currency.

Interest rate: The interest rate is the amount a lender charges for the use of assets expressed as a percentage of the principal. The interest rate is usually noted on a yearly basis known as the annual percentage rate (APR). The assets borrowed could include capital, consumer goods, or large assets such as a vehicle or building.


Jobless Claims: A weekly statistic reported by the U.S. Department of Labor that counts people filing to receive unemployment insurance benefits. There are two categories of jobless claims—initial, which comprises people filing for the first time, and continuing, which consists of unemployed people who have been receiving unemployment benefits for a while. Jobless claims are an important leading indicator on the state of the employment situation and the health of the economy.

Jobs growth: is a figure measured by the Bureau of Labor Statistics (BLS) that shows how many jobs are created in the country on a monthly basis. The figure is used as a measure of economic expansion and regarded as a litmus test for national economic health. The Bureau of Labor Statistics gathers the data by sending out a survey and publishing the results every month. Jobs growth can be measured by comparing many of the statistics compiled by the Bureau of Labor Statistics, but the most common one is Total Nonfarm Payrolls, which tracks the total number of people in the country being paid for work that is not farming.

JPY: Japanese Yen – official currency of Japan.


Key currency: A key currency refers to a type of money which is stable, does not fluctuate much, and provides the foundation for exchange rates for international transactions. Because of their global use, key currencies usually set the value of other currencies. Also, these currencies tend to have a stable valuation over time. A key currency usually comes from a country that is financially strong, economically stable and developed, and one that is involved in the global market. Key currency rates fluctuate daily, and updated key currency rates can appear in financial institutions and financial reporting outlets.


Long Position: In trading, long describes a trade that a trader expects to incur a profit if the asset or currency being traded rises in price. It is often referred to as ‘going long’.


Majors: The five most traded currencies (USD, EUR, GBP, JPY, CHF).

Margin Call: A payment due from the customer to a broker if the value of the customers total hedge position exceeds their approved OTM exposure limit. A margin call may also be referred to as a ‘call for funds’ or a ‘maintenance call’.

Minors: These are currencies that belong to countries which have a high variety of natural resources which give their currencies intrinsic value, or currencies outside of the majors (AUD, CAD, NZD).


Non-Farm Payrolls: (Payrolls Friday) refers to the monthly economic report on jobs growth in the US economy. This is considered a key economic indicator on the health of the economy and is closely watched by the US central bank when setting interest rates. As a result, this is considered a key trading point for the US Dollar.


OTM Exposure Limit: The OTM exposure limit is a type of credit offering that a broker can provide for a customer. The ‘Out of The Money’ exposure limit is approved limit that negates the need for a customer to make an advance payment on a forward contract or option product.

Out of the Money (OTM): Currency market movements can push the customers hedge position out of the money, meaning that the total cost of the hedging products is now worth less than when originally booked.


Pips: Most currency pairs are quoted to four decimal places, and one pip is equal to 0.0001. For example, in the GBP/USD exchange rate, the difference between a $1.2000 rate and a $1.2050 rate is 50 pips.


Quantitative Easing (QE): is an unconventional tool used in monetary policy where a central bank creates new money electronically to buy financial assets, like government bonds.


Rally: A period in which the price of an asset, exchange rate or financial instrument sees a sustained upward momentum. Typically, a rally will arrive after a period in which prices have been flat or in a decline.

Resistance: A resistance level is where the price of a financial asset or currency struggles to rise above. This means the price is more likely to ‘fall’ after reaching this level rather than break through it. However, once the price has broken above a resistance level, it is likely to continue rising until finding another resistance level.

Risk Management: The process of identifying, assessing, and controlling threats to an organisation’s capital and earnings.


Safe Haven Currency: In macroeconomics, hard currency, safe-haven currency or strong currency is any globally traded currency that serves as a reliable and stable store of value (usually JPY, CHF and USD).

Sell off: A rapid selling of financial assets such as stocks, bonds and currencies. This can happen after an unexpected event or a shock.

Short Position: In trading, short describes a trade that a trader expects to incur a profit if the asset or currency being traded falls in price. It is also often referred to as ‘going short’ ‘shorting’ or sometimes just ‘selling’.

SNB: Swiss National Bank, the central bank for Switzerland.

Strong Currency: A currency that is more expensive in price in comparison to other currencies.

Support Level: Is where the price of a financial asset or currency tends to find support as it falls. This means the price is more likely to bounce off this level rather than break through it. However, once the price has fallen below a support level, it is likely to continue falling until finding another support level.


Tangible asset: is an asset that has a finite monetary value and usually a physical form. Tangible assets can typically always be transacted for some monetary value though the liquidity of different markets will vary. Tangible assets are the opposite of intangible assets which have a theorized value rather than a transactional exchange value.

Trading account: can be any investment account containing securities, cash, or other holdings. A trading account usually refers to a day trader’s primary account. These investors tend to buy and sell assets frequently, often within the same trading session, and their accounts are subject to special regulation as a result. The assets held in a trading account are separated from others that may be part of a long-term buy and hold strategy.


U.S. Treasury: is the government department responsible for issuing all Treasury bonds, notes and bills. Among the government departments operating under the U.S. Treasury umbrella are the Internal Revenue Service (IRS), the U.S. Mint, the Bureau of the Public Debt, and the Alcohol and Tobacco Tax Bureau. Key functions of the U.S. Treasury include printing bills, postage, and Federal Reserve notes, minting coins, collecting taxes, enforcing tax laws, managing all government accounts and debt issues, and overseeing U.S. banks in cooperation with the Federal Reserve. The secretary of the Treasury is responsible for international monetary and financial policy, including foreign exchange intervention.

USD: is the abbreviation for the U.S. Dollar, the official currency of United States of America. (The world's primary reserve currency).


Volatility: The unpredictable movement of exchange rates in the global foreign exchange market.


Weak Currency: is a currency that is less expensive in price in comparison to other currencies.

White label products: are sold by retailers with their own branding and logo however, the products themselves are manufactured by a third party. White labelling occurs when the manufacturer of an item uses the branding requested by the purchaser, or marketer, instead of its own. The final product looks as if it has been produced by the purchaser.

World Economic Outlook (WEO): is a report by the International Monetary Fund that analyses key parts of the IMF's surveillance of economic developments and policies in its member countries. It also predicts developments in the global financial markets and economic systems. The WEO is normally prepared twice a year and is used in meetings of the International Monetary and Financial Committee.


XCD (Eastern Caribbean Dollar): is the official currency for eight countries: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines.


Year to date (YTD): refers to the period beginning on the first day of the current calendar year (or fiscal year), up to the current date. YTD information is useful for analysing business trends over time or comparing performance data to competitors or peers in the same industry.

Yield: refers to the earnings generated and realised on an investment over a particular period of time. It is expressed as a percentage based on the invested amount, face value of the security, or current market value. It includes the interest earned or dividends received from holding a particular security. Depending on the valuation (fixed vs. fluctuating) of the security, yields may be classified as known or expected.


Zero-bound: is an expansionary monetary policy tool where a central bank lowers short-term interest rates to zero (if needed) to stimulate the economy.