While not suggesting you quit the day job and start trading FX retail (don't), having an understanding of the currency market goes a long way toward building the macro mental matrix which allows you to spot anomalies, in the same way commodities or interest rates do.
Whether your "Saaaay" moment (sort of like "Eureka" but slower) upon observing same leads you to investigate further or run away to fight another day, is up to you and your mental/emotional makeup.
From Verdad's Weekly Research:
Whatever Happened to FX?
This is a three-part series exploring the underperformance of currency markets and strategies since the great financial crisis. This week, we take stock of the problem and whether FX underperformance has created a hidden opportunity.
At $6.6 trillion in daily volume, the foreign exchange market is the largest financial market in the world. Yet, despite its size, the currency market has not been a profitable one for investors over the last decade. In fact, from the end of 2010 to today, macro currency hedge funds in aggregate have generated zero profits.
Figure 1: HFRI Macro Currency Index (2010–Present)
Source: HFR Research,Verdad
This zero-return environment has led to an exodus of currency hedge funds. After peaking at around 145 in 2008, the count of funds focused on currencies is now down below 50.
What’s happened to currency markets and currency strategies that’s rendered the market so barren of opportunities and profitable strategies? The short answer is a sharp decline in the volatility of both exchange and interest rates since the financial crisis.
Currency returns are driven by two variables: changes in the spot rate (i.e., how many rupees you can buy with a dollar) and changes in the spread between countries’ interest rates (i.e., how much interest rupees earn versus how much interest dollars earn in interest-bearing accounts).
The past decade has seen a convergence of global interest rates. The below chart shows the average spread between the 20 most traded foreign currencies and the US Dollar since 1982. This has bounded the opportunity set for those trying to arbitrage interest rate differentials.
Figure 2: Average Depository Rate Spread to USD since 1999
....MUCH MORE
