Bond markets predict exchange rates with up to 90% accuracy.
The article shows that bond market risk factors can help predict changes in exchange rates. By studying bond markets and foreign exchange markets together, researchers found that bond market factors can explain a large portion of exchange rate movements. They also discovered that the relationship between these markets varies between countries that invest in other currencies and those that use their own currency for funding. Overall, the study suggests that bond markets play a significant role in understanding foreign exchange market behavior.