Currency Trading and Intermarket Analysis How to Profit from the Shifting Currents in Global Markets

by Laï; di , Ashraf

• ISBN13: 9780470226230
• ISBN10: 0470226234
• Edition: 1st
• Format: Hardcover
• Copyright: 2008-12-10
• Publisher: Wiley

Summary

As head FX strategist at CMC Markets-one of the world's leading forex/commodity brokers-Ashraf Laidi understands the forces shaping today's currency market and their interplay with interest rates, equities, and commodities. And now, with Currency Trading and Intermarket Analysis, he shares his extensive experiences in this field with you. Throughout the book, Laidi outlines the tools needed to understand the macroeconomic and financial nuances of this dynamic field and provides you with insights that are essential to making the most of your time within it.

Author Biography

Ashraf La+¼di is the head FX Strategist at CMC Markets, where he oversees the analysis and forecasting functions of G-10 currency pairs as well as decisions and trends of the major global central banks. His online FX analysis has received wide following for more than a decade, centering on G-10 currencies and economies. Prior to joining CMC, Laïdi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk for Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laïdi also created the first 24-hour currency Web site for traders and researchers during the inception of the Euro. He is the founder of AshrafLaidi.com.

Table of Contents

Foreword	p. xi
Preface	p. xiii
Acknowledgments	p. xvii
Gold and the Dollar	p. 1
End of Bretton Woods System Marks Gold's Takeoff	p. 2
Fed Tightening and FX Interventions Rein in Gold Rally	p. 3
Central Banks' Gold Sale Agreements	p. 5
Gold-USD Inverse Relation	p. 6
Recent Exceptions to the Inverse Rule	p. 6
Using Gold to Identify Currency Leaders and Laggards	p. 8
Gold's Secular Performance	p. 11
Valuing Currencies via Gold	p. 13
Golden Correlations	p. 14
Don't Forget Falling Gold Production	p. 16
Gold and Equities: Hard versus Monetary Assets	p. 16
Equity-to-Gold Ratios	p. 19
The Role of the Speculators	p. 21
Gold Is Part of a Larger Story	p. 22
Oil Fundamentals in the Currency Market	p. 25
From a Gold Standard to an Oil Standard (1970s-1980s)	p. 26
Oil Glut and Price Collapse (1981-1986)	p. 32
The Super Dollar of 1980-1984: The World's Third Oil Shock	p. 34
World Intervenes against Strong Dollar (1985-1987)	p. 39
Iraq's Invasion of Kuwait and the Gulf War (1990-1991)	p. 41
The Asian Crisis and OPEC's Miscalculation (1997-1998)	p. 44
Oil Thrives on World Growth, Dot-Com Boom (1999-2000)	p. 46
Iraq War Fuels Oil Rally, Dollar Flounders, China Takes Over (2002 to Present)	p. 46
Summary	p. 49
When the Dollar Was King (1999-2001)	p. 51
The Major Theories	p. 52
Annual Performance Analysis of Individual Currencies	p. 53
Summary	p. 70
The Dollar Bear Awakens (2002-2007)	p. 71
2002: The Beginning of the Dollar Bear Market	p. 71
2003: Dollar Extends Damage, Commodity Currencies Soar	p. 78
2004: Global Recovery Boosts Currencies against U.S. Dollar	p. 84
2005: Commodities Soar alongside Dollar, Carry Trades Emerge	p. 90
2006: Dollar Vulnerable as Fed Ends Two-Year Tightening	p. 94
2007: Record Oil Boosts Loonie, Helpless Fed Hits Greenback	p. 102
Lessons Learned	p. 108
Risk Appetite in the Markets	p. 111
Carry Trades in Foreign Exchange	p. 112
Using Risk Appetite to Gauge FX Flows	p. 121
Tying It All Together: 1999-2007	p. 134
Reading the Fed via Yield Curves, Equities, and Commodities	p. 137
Yield Curves and the Economy	p. 138
Types of Yield Curves	p. 139
Rationale of Inverted Yield Curve Implications	p. 142
Effectiveness of Yield Curve Signals' Implications	p. 142
Greenspan's "Conundrum" Proved Bernanke's Problem	p. 143
Implications for Growth, Stocks, and Currencies	p. 145
Tying Interest Rates to the Gold-Oil Ratio	p. 153
Conclusion	p. 158
U.S. Imbalances, FX Reserve Diversification, and the U.S. Dollar	p. 161
The U.S. Twin Deficits	p. 162
U.S. Current Account Deficit: Old Problem, New Challenges	p. 165
Adding the Budget Balance to the Mix	p. 169
Financing the Deficits: The Path to Unsustainability?	p. 170
Dissecting U.S.-Bound Foreign Capital Flows	p. 172
U.S. Stocks and Bonds Vie for Foreign Money	p. 173
Capital Flows Shift Identities	p. 177
Foreign Direct Investment and M&As	p. 179
How Long Will Foreign Capital Be Available on the Cheap?	p. 181
Don't Ignore U.S. Investors' Flows Abroad	p. 182
Currency Reserve Diversification: OPEC and the Middle East	p. 185
Further Currency Diversification Is Inevitable	p. 187
The View Ahead	p. 189
Commodities Supercycles and Currencies	p. 191
The Current Commodity Cycle versus Previous Cycles	p. 193
Dissecting Commodity Classes	p. 196
Commodities and their Currencies	p. 207
Developing World to Maintain Ripe Outlook for Food and Grains	p. 208
Energy Efficiency Not Enough to Halt High Oil	p. 214
Copper and Gold to Shine on Long-Term Fundamentals	p. 219
Commanding Heights or Common Bubbles?	p. 223
Selected Topics in Foreign Exchange	p. 225
Revisiting Yield Curves	p. 225
Is Dollar Stability a Necessity?	p. 230
How Far Will Commodities Outstrip Equities?	p. 236
U.S. Politics and the U.S. Dollar	p. 240
Conclusion	p. 247
Bibliography	p. 249
About the Author	p. 251
Index	p. 253
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