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

Overview

Currencies are becoming an integral part of many investors'portfolios and have grown to be a distinct asset class in banks'investment products. While the mechanics of the forex market andthe theories underpinning it have been widely explored, there hasbeen little discussion regarding the practical intermarketrelationships shaping currencies via interest rates, equities, andcommodities.

Nobody is more familiar with this situation than author AshrafLaïdi. As head FX strategist at ...

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Overview

Currencies are becoming an integral part of many investors'portfolios and have grown to be a distinct asset class in banks'investment products. While the mechanics of the forex market andthe theories underpinning it have been widely explored, there hasbeen little discussion regarding the practical intermarketrelationships shaping currencies via interest rates, equities, andcommodities.

Nobody is more familiar with this situation than author AshrafLaïdi. As head FX strategist at CMC Markets—one of theworld's leading forex/commodity brokers—he understands theforces shaping today's currency market and their interplay withinterest rates, equities, and commodities. And now, with CurrencyTrading and Intermarket Analysis, he shares his extensiveexperiences in this field with you.

Following an innovative approach based on what still works andwhat doesn't in currency market analysis; applying charts and casestudies to intermarket analysis in unprecedented ways; and weighingboth old theories and newly emerging phenomena in this arena,Currency Trading and Intermarket Analysis will put you in a betterposition to assess shifts in economic and market dynamics and makemore profitable trading decisions in the process.

Some of the essential issues addressed include:

  • The latest commodity boom with a breakdown by individualcommodity group and its implication for currencies
  • The relationship between short- and long-term interest rates andhow it can be applied to anticipate vital shifts in central bankdecisions and turning points in economic growth
  • The drivers of risk appetite in the market and their effect onforeign exchange
  • Central bank currency reserves in regions such as theoil-producing nations, and the evolution of power between theDollar and the Euro
  • A gold-based approach to valuing the major currencies anddetermining their secular strengths and weaknesses over the pastdecades
  • And much more

Currency trading has increased in size and speed, and so has itsimpact on the global financial scene. Having a solid grasp of thesemarkets is no longer limited to figuring out interest rate andgrowth differentials. Currency Trading and Intermarket Analysisoutlines the tools needed to understand the macroeconomic andfinancial nuances of this dynamic field and provides you withinsights that are essential to making the most of your time withinit.

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Product Details

  • ISBN-13: 9780470226230
  • Publisher: Wiley
  • Publication date: 12/10/2008
  • Series: Wiley Trading Series, #341
  • Edition description: New
  • Edition number: 1
  • Pages: 304
  • Sales rank: 667,541
  • Product dimensions: 9.28 (w) x 6.28 (h) x 1.01 (d)

Meet the Author

Ashraf Laïdl is the head FX Strategist at CMC Markets,where he oversees the analysis and forecasting functions of G-10currency pairs as well as decisions and trends of the major globalcentral banks. His online FX analysis has received wide followingfor more than a decade, centering on G-10 currencies and economies.Prior to joining CMC, Laïdi monitored the performance ofa multi-FX portfolio at the United Nations, assessed sovereign andproject investment risk for Hagler Bailly and the World Bank, andanalyzed emerging market bonds at Reuters. Laïdi alsocreated the first 24-hour currency Web site for traders andresearchers during the inception of the Euro. He is the founder ofAshrafLaidi.com.

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Table of Contents

Foreword.

Preface.

Acknowledgments.

Chapter 1: Gold and the Dollar.

End of Bretton Woods System Marks Gold's Takeoff.

Fed Tightening and FX Interventions Rein in Gold Rally.

Central Banks' Gold Sale Agreements.

Gold-USD Inverse Relation.

Recent Exceptions to the Inverse Rule.

Using Gold to Identify Currency Leaders andLaggards.

Gold's Secular Performance.

Valuing Currencies via Gold.

Golden Correlations.

Don't Forget Falling Gold Production.

Gold and Equities: Hard versus Monetary Assets.

Equity-to-Gold Ratios.

The Role of the Speculators.

Gold is Part of a Larger Story.

Chapter 2: Oil Fundamentals in the Currency Market.

From a Gold Standard to an Oil Standard (1970s-1980s).

Oil Glut and Price Collapse (1981-1986).

The Super Dollar of 1980-1984: World's Third Oil Shock.

World Intervenes against Strong Dollar (1985-1987).

Iraq's Invasion of Kuwait and the Gulf War (1990-1991).

The Asian Crisis and OPEC's Miscalculation (1997-1998).

Oil Thrives on World Growth, Dot-Com Boom (1999-2000).

Iraq War Fuels Oil Rally, Dollar Flounders, China Takes Over(2002-Present).

Summary.

Chapter 3: When the Dollar Was King (1999-2001).

The Major Theories.

Annual Performance Analysis of Individual Currencies.

Summary.

Chapter 4: The Dollar Bear Awakens (2002-2007).

2002: The Beginning of the Dollar Bear Market.

2003: Dollar Extends Damage, Commodity Currencies Soar.

2004: Global Recovery Boosts Currencies against US Dollar.

2005: Commodities Soar alongside Dollar, Carry TradesEmerge.

2006: Dollar Vulnerable as Fed Ends Two-Year Tightening.

2007: Record Oil Boosts Loonie, Helpless Fed Hits Greenback.

Lessons Learned.

Chapter 5: Risk Appetite in the Markets.

Carry Trades in Foreign Exchange.

Using Risk Appetite to Gauge FX Flows.

Tying It All Together: 1999-2007.

Chapter 6: Reading the Fed via Yield Curves, Equities andCommodities.

Yield Curves and the Economy.

Types of Yield Curves.

Rationale of Inverted Yield Curve Implications.

Effectiveness of Yield Curve Signals' Implications.

Greenspan's â??Conundrumâ?? Proved Bernanke'sProblem.

Implications for Growth, Stocks, and Currencies.

Tying Interest Rates to the Gold-Oil Ratio.

Conclusion.

Chapter 7: U.S. Imbalances, FX Reserve Diversification andthe U.S. Dollar.

The U.S. Twin Deficits.

U.S. Current Account Deficit: Old Problem, New Challenges.

Adding the Budget Balance to the Mix.

Financing the Deficits: The Path to Unsustainability?

Dissecting U.S.-Bound Foreign Capital Flows.

U.S. Stocks and Bonds Vie for Foreign Money.

Capital Flows Shift Identities.

Foreign Direct Investment and M&As.

How Long Foreign Capital Be Available on the Cheap?

Don't Ignore U.S. Investors' Flows Abroad.

Currency Reserve Diversification: OPEC and the Middle East.

Further Currency Diversification Is Inevitable.

The View Ahead.

Chapter 8: Commodities Supercycles and Currencies.

The Current Commodity Cycle versus Previous Cycles.

Dissecting Commodity Classes.

Commodities and their Currencies.

Developing World to Maintain Ripe Outlook for Food andGrains.

Energy Efficiency Not Enough to Halt High Oil.

Copper and Gold to Shine on Long-Term Fundamentals.

Commanding Heights or Common Bubbles?

Chapter 9: Selected Topics in Foreign Exchange.

Revisiting Yield Curves.

Is Dollar Stability a Necessity?

How Far Will Commodities Outstrip Equities?

U.S. Politics and the U.S. Dollar.

Bibliography.

About the Author.

Index.

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