About & Methodology

PIPTHEORY is a free, systematic Macro Currency Strength Meter. It scores each of the eight major currencies — USD, EUR, GBP, JPY, CHF, CAD, AUD and NZD — on a scale from +100 (very strong) to −100 (very weak), updated every day. Strength is always relative: a currency is only strong or weak compared to the others.

A research-grounded model

The score is the output of a proprietary quantitative framework that synthesises a broad spectrum of macroeconomic and market data into a single number. The methodology is grounded in decades of established academic research on the fundamental drivers of exchange rates, and has been refined and stress-tested against years of historical data across the full basket of major currencies.

Crucially, it is mechanical, not opinion — there is no AI writing the numbers and nothing subjective. That makes it fully reproducible: the same inputs always produce the same score, so it never contradicts itself from one day to the next.

What it weighs

Rather than relying on any single indicator, the model evaluates each currency across five broad dimensions, each contextualised against its own history:

• Interest Rates — the yield a currency offers relative to its peers.
• Growth — the strength and momentum of the underlying economy.
• Positioning — how the world's largest investors are positioned.
• Risk Regime — safe-haven versus risk-seeking capital flows.
• Commodities — global trade and terms-of-trade dynamics.

These are distilled into one comparable, reproducible score and tracked over time. A currency pair's reading follows from the relationship between the two currencies' scores. The model also surfaces supplementary signals — such as how stretched a currency looks and whether the market has already moved — as additional context.

Research foundations

The model is our own synthesis, but every dimension it weighs is drawn from the established academic literature on what moves exchange rates. A few foundational examples:

• Interest rates & carry — Lustig, Roussanov & Verdelhan (2011), "Common Risk Factors in Currency Markets," Review of Financial Studies; Fama (1984), "Forward and Spot Exchange Rates," Journal of Monetary Economics.
• Fundamentals & horizon — Meese & Rogoff (1983), "Empirical Exchange Rate Models of the Seventies," Journal of International Economics; Mark (1995), "Exchange Rates and Fundamentals: Evidence on Long-Horizon Predictability," American Economic Review.
• Positioning — Klitgaard & Weir (2004), "Exchange Rate Changes and Net Positions of Speculators in the Futures Market," FRBNY Economic Policy Review.
• Risk & safe havens — Ranaldo & Söderlind (2010), "Safe Haven Currencies," Review of Finance; Brunnermeier, Nagel & Pedersen (2008), "Carry Trades and Currency Crashes," NBER Macroeconomics Annual.
• Commodities — Chen & Rogoff (2003), "Commodity Currencies," Journal of International Economics.
• Valuation & momentum — Asness, Moskowitz & Pedersen (2013), "Value and Momentum Everywhere," Journal of Finance; Menkhoff, Sarno, Schmeling & Schrimpf (2012), "Currency Momentum Strategies," Journal of Financial Economics.

PIPTHEORY is an independent synthesis and is not affiliated with or endorsed by these authors.

How to read it — honestly

Treat the meter as macro context, not a trading signal. A high score means the fundamental wind is at a currency's back; it does not predict tomorrow's price. Markets are forward-looking and often price the fundamental picture in advance, and no mechanical model sees political shocks or surprises. The score reflects the slow macro tide over weeks, not day-to-day noise.

Updates

The meter refreshes automatically every four hours. Fast-moving inputs — prices, the risk gauge and other market-driven signals — stay current, while the slower rate, growth and positioning data updates as it is released. The "Updated" time at the top of the homepage shows the latest refresh. It is frequently updated macro context, not a real-time alert service.

What this is NOT

• Not financial advice. Nothing here is a recommendation to buy, sell or hold anything.
• Not a signal service. No entry levels, stops or targets.
• Not personalised. Everyone sees the same numbers; it doesn't know your situation.
• Not a crystal ball. The model can be wrong, and markets move on things it can't measure.

Markets carry the risk of loss. Past performance does not indicate future results. Consult a licensed financial adviser in your jurisdiction before acting on anything you read here.

Privacy & advertising

PIPTHEORY is free and supported by advertising (Google AdSense). Ad partners may use cookies for ad delivery and frequency capping. Full details — including how to opt out of personalised ads — are in the Privacy Policy. Questions: contact@piptheory.com.