, we provide a general explanation of this turbulence in terms of the modern "asset market theory" to exchange …-rate determination. This theory emphasizes that exchange rates, like the prices of other assets determined in organized markets, are …

fundamentals, focusing primarily on temperature. We show that when theory clearly identifies the fundamental, i.e., at temperatures …-thirds of the entire winter return variability occurs on these days. Moreover, when theory suggests no such relation, i.e., at … is good news for the theory and for market efficiency, not bad news. In terms of residual FCOJ return volatility, we also …