The Looney is Dovish, the Kiwi is Bearish: Forex Jargon Explained

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It doesn’t take a seasoned trader to notice that the forex market is packed with funny jargon. Reading industry news can be a nightmare that’ll make you wonder if you speak English at all. Dovish? Bearish? Kiwi? Are we in a zoo or what?

For starters, some currencies have nicknames. For instance, Australian Dollar is referred to as Aussie, New Zealand Dollar is also known is Kiwi – and it’s easy to see why:

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New Zealand Dollar: the Kiwi

The British Pound is sometimes referred to as Sterling. Canadian Dollar is a Loonie, and US Dollar is, unsurprisingly, known as buck or a Greenback.

When it comes to currency pairs, there are a few established terms, too. Interestingly, GBPUSD is known as Cable. In the 19th century, the exchange rate between the USD and GBP was transmitted across the Atlantic ocean by a large underwater Cable. USDCHF pair is called ‘Swissy’, and the USDJPY is a ‘Gopher’.

When a market trend emerges or economic indicators and data are released, they can be described as bullish or bearish.Bullish means going up while bearish means going downward. There are two explanations to these terms. According to the first one, the terms follow the way these animals attack. A bear would attack its enemy from upside to downside (she will stand up and move down to the enemy attacking them with its claws), while a bull attacks from downside to the upside. A bull will stood down and then move upwards to attack its enemy with his horns. Another explanation suggests that bull’s horns are always pointing up, so a bullish trend means that a currency will go up. By the same token, when a bear walks, its head is pointing down. So a bearish trend means that a currency or market will go downside.

‘Bears’ or ‘bulls’ can also refer to investors and strategies.  A “bear” (investor) is the one who thinks the market would drop while a bull is the one who expects the market to rise. Similarly, a bearish strategy is one that sells based on the belief that the market would drop while a bullish strategy is the opposite.

There’s also another pair of ‘zoological’ terms to describe policies adopted by central banks: hawkish and dovish. Hawkish is an aggressive strategy, just like the bird, while the ‘dovish’ strategy means a softer take on the policy.

So, forex-specific terms aren’t that hard: bears attack downwards while bulls go upwards with their horns.Hawkish and dovish strategies are almost self-explanatory. And a Kiwi is not just a flightless bird that lives in New Zealand, but also an unofficial term for this country’s currency – mostly because this nearly extinct bird is pictured on the NZD coins. Now, which forex term makes you smile?

 

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