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FX Bubbles: Through the Lens of Shiller and Sornette
It is widely understood that psychological factors such as perceptions and herd mentality can significantly influence stock market dynamics and precipitate speculative bubbles and abrupt market corrections. Less appreciated is the fact that the foreign exchange (FX) market is equally susceptible to such risks and perhaps more so in the context of geopolitical events. The FX market — an over-the-counter marketplace that sets exchange rates for currencies worldwide — is the largest market globally in terms of trading volume. We’re going to look at bubbles in the FX market through the lens of Robert Shiller and ... (full story)