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 and the theories underpinning it have been widely explored, there has been little discussion regarding the practical intermarket relationships shaping currencies via interest rates, equities, and commodities.
Nobody is more familiar with this situation than author Ashraf Laidi. As head FX strategist at CMC Markets one of the world′s leading forex/commodity brokers he 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.
Some of the essential issues addressed include:
- The latest commodity boom with a breakdown by individual commodity group and its implication for currencies
- The relationship between short– and long–term interest rates and how it can be applied to anticipate vital shifts in central bank decisions and turning points in economic growth
- The drivers of risk appetite in the market and their effect on foreign exchange
- Central bank currency reserves in regions such as the oil–producing nations, and the evolution of power between the Dollar and the Euro
- A gold–based approach to valuing the major currencies and determining their secular strengths and weaknesses over the past decades
- And much more
Currency trading has increased in size and speed, and so has its impact on the global financial scene. Having a solid grasp of these markets is no longer limited to figuring out interest rate and growth differentials. Currency Trading and Intermarket Analysis 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.
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 LeadersÂ and Laggards.
Gold′s Secular Performance.
Valuing Currencies via Gold.
Don′t Forget Falling Gold Production.
Gold and Equities: Hard versus Monetary Assets.
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).
Chapter 3: When the Dollar Was King (1999–2001).
The Major Theories.
Annual Performance Analysis of Individual Currencies.
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 Trades Emerge.
2006: Dollar Vulnerable as Fed Ends Two–Year Tightening.
2007: Record Oil Boosts Loonie, Helpless Fed Hits Greenback.
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 and Commodities.
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′s Problem.
Implications for Growth, Stocks, and Currencies.
Tying Interest Rates to the Gold–Oil Ratio.
Chapter 7: U.S. Imbalances, FX Reserve Diversification and the 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 and Grains.
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.
About the Author.