Ashraf Laïdi
Currency Trading and Intermarket Analysis
How to Profit from the Shifting Currents in Global Markets
Ashraf Laïdi
Currency Trading and Intermarket Analysis
How to Profit from the Shifting Currents in Global Markets
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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.
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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.
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Hinweis: Dieser Artikel kann nur an eine deutsche Lieferadresse ausgeliefert werden.
Produktdetails
- Produktdetails
- Wiley Trading Series
- Verlag: Wiley & Sons
- Artikelnr. des Verlages: 14522623000
- 1. Auflage
- Seitenzahl: 304
- Erscheinungstermin: 1. November 2008
- Englisch
- Abmessung: 235mm x 157mm x 21mm
- Gewicht: 498g
- ISBN-13: 9780470226230
- ISBN-10: 0470226234
- Artikelnr.: 23896249
- Wiley Trading Series
- Verlag: Wiley & Sons
- Artikelnr. des Verlages: 14522623000
- 1. Auflage
- Seitenzahl: 304
- Erscheinungstermin: 1. November 2008
- Englisch
- Abmessung: 235mm x 157mm x 21mm
- Gewicht: 498g
- ISBN-13: 9780470226230
- ISBN-10: 0470226234
- Artikelnr.: 23896249
Ashraf Laïdl 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.
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 and Laggards. 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 Trades Emerge. 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 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. Conclusion.
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. Bibliography. About the Author. Index.
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 and Laggards. 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 Trades Emerge. 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 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. Conclusion.
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. Bibliography. About the Author. Index.
Foreword xi
Preface xiii
Acknowledgments xvii
Chapter 1 Gold and the Dollar 1
End of Bretton Woods System Marks Gold’s Takeoff 2
Fed Tightening and FX Interventions Rein in Gold Rally 3
Central Banks’ Gold Sale Agreements 5
Gold-USD Inverse Relation 6
Recent Exceptions to the Inverse Rule 6
Using Gold to Identify Currency Leaders and Laggards 8
Gold’s Secular Performance 11
Valuing Currencies via Gold 13
Golden Correlations 14
Don’t Forget Falling Gold Production 16
Gold and Equities: Hard versus Monetary Assets 16
Equity-to-Gold Ratios 19
TheRoleoftheSpeculators 21
Gold Is Part of a Larger Story 22
Chapter 2 Oil Fundamentals in the Currency Market 25
From a Gold Standard to an Oil Standard (1970s–1980s) 26
Oil Glut and Price Collapse (1981–1986) 32
The Super Dollar of 1980–1984: The World’s Third Oil Shock 34
World Intervenes against Strong Dollar (1985–1987) 39
Iraq’s Invasion of Kuwait and the Gulf War (1990–1991) 41
The Asian Crisis and OPEC’s Miscalculation (1997–1998) 44
Oil Thrives on World Growth, Dot-Com Boom (1999–2000) 46
Iraq War Fuels Oil Rally, Dollar Flounders, China Takes Over (2002 to Present) 46
Summary 49
Chapter 3 When the Dollar Was King (1999–2001) 51
The Major Theories 52
Annual Performance Analysis of Individual Currencies 53
Summary 70
Chapter 4 The Dollar Bear Awakens (2002–2007) 71
2002: The Beginning of the Dollar Bear Market 71
2003: Dollar Extends Damage, Commodity Currencies Soar 78
2004: Global Recovery Boosts Currencies against U.S. Dollar 84
2005: Commodities Soar alongside Dollar, Carry Trades Emerge 90
2006: Dollar Vulnerable as Fed Ends Two-Year Tightening 94
2007: Record Oil Boosts Loonie, Helpless Fed Hits Greenback 102
Lessons Learned 108
Chapter 5 Risk Appetite in the Markets 111
Carry Trades in Foreign Exchange 112
Using Risk Appetite to Gauge FX Flows 121
Tying It All Together: 1999–2007 134
Chapter 6 Reading the Fed via Yield Curves, Equities, and Commodities 137
Yield Curves and the Economy 138
Types of Yield Curves 139
Rationale of Inverted Yield Curve Implications 142
Effectiveness of Yield Curve Signals’ Implications 142
Greenspan’s “Conundrum” Proved Bernanke’s Problem 143
Implications for Growth, Stocks, and Currencies 145
Tying Interest Rates to the Gold-Oil Ratio 153
Conclusion 158
Chapter 7 U.S. Imbalances, FX Reserve Diversification, and the U.S. Dollar 161
The U.S. Twin Deficits 162
U.S. Current Account Deficit: Old Problem, New Challenges 165
Adding the Budget Balance to the mix 169
Financing the Deficits: The Path to Unsustainability? 170
Dissecting U.S.-Bound Foreign Capital Flows 172
U.S. Stocks and Bonds Vie for Foreign Money 173
Capital Flows Shift Identities 177
Foreign Direct Investment and M&As 179
How Long Will Foreign Capital Be Available on the Cheap? 181
Don’t Ignore U.S. Investors’ Flows Abroad 182
Currency Reserve Diversification: OPEC and the Middle East 185
Further Currency Diversification Is Inevitable 187
The View Ahead 189
Chapter 8 Commodities Supercycles and Currencies 191
The Current Commodity Cycle versus Previous Cycles 193
Dissecting Commodity Classes 196
Commodities and their Currencies 207
Developing World to Maintain Ripe Outlook for Food and Grains 208
Energy Efficiency Not Enough to Halt High Oil 214
Copper and Gold to Shine on Long-Term Fundamentals 219
Commanding Heights or Common Bubbles? 223
Chapter 9 Selected Topics in Foreign Exchange 225
Revisiting Yield Curves 225
Is Dollar Stability a Necessity? 230
How Far Will Commodities Outstrip Equities? 236
U.S. Politics and the U.S. Dollar 240
Conclusion 247
Bibliography 249
About the Author 251
Index 253
Preface xiii
Acknowledgments xvii
Chapter 1 Gold and the Dollar 1
End of Bretton Woods System Marks Gold’s Takeoff 2
Fed Tightening and FX Interventions Rein in Gold Rally 3
Central Banks’ Gold Sale Agreements 5
Gold-USD Inverse Relation 6
Recent Exceptions to the Inverse Rule 6
Using Gold to Identify Currency Leaders and Laggards 8
Gold’s Secular Performance 11
Valuing Currencies via Gold 13
Golden Correlations 14
Don’t Forget Falling Gold Production 16
Gold and Equities: Hard versus Monetary Assets 16
Equity-to-Gold Ratios 19
TheRoleoftheSpeculators 21
Gold Is Part of a Larger Story 22
Chapter 2 Oil Fundamentals in the Currency Market 25
From a Gold Standard to an Oil Standard (1970s–1980s) 26
Oil Glut and Price Collapse (1981–1986) 32
The Super Dollar of 1980–1984: The World’s Third Oil Shock 34
World Intervenes against Strong Dollar (1985–1987) 39
Iraq’s Invasion of Kuwait and the Gulf War (1990–1991) 41
The Asian Crisis and OPEC’s Miscalculation (1997–1998) 44
Oil Thrives on World Growth, Dot-Com Boom (1999–2000) 46
Iraq War Fuels Oil Rally, Dollar Flounders, China Takes Over (2002 to Present) 46
Summary 49
Chapter 3 When the Dollar Was King (1999–2001) 51
The Major Theories 52
Annual Performance Analysis of Individual Currencies 53
Summary 70
Chapter 4 The Dollar Bear Awakens (2002–2007) 71
2002: The Beginning of the Dollar Bear Market 71
2003: Dollar Extends Damage, Commodity Currencies Soar 78
2004: Global Recovery Boosts Currencies against U.S. Dollar 84
2005: Commodities Soar alongside Dollar, Carry Trades Emerge 90
2006: Dollar Vulnerable as Fed Ends Two-Year Tightening 94
2007: Record Oil Boosts Loonie, Helpless Fed Hits Greenback 102
Lessons Learned 108
Chapter 5 Risk Appetite in the Markets 111
Carry Trades in Foreign Exchange 112
Using Risk Appetite to Gauge FX Flows 121
Tying It All Together: 1999–2007 134
Chapter 6 Reading the Fed via Yield Curves, Equities, and Commodities 137
Yield Curves and the Economy 138
Types of Yield Curves 139
Rationale of Inverted Yield Curve Implications 142
Effectiveness of Yield Curve Signals’ Implications 142
Greenspan’s “Conundrum” Proved Bernanke’s Problem 143
Implications for Growth, Stocks, and Currencies 145
Tying Interest Rates to the Gold-Oil Ratio 153
Conclusion 158
Chapter 7 U.S. Imbalances, FX Reserve Diversification, and the U.S. Dollar 161
The U.S. Twin Deficits 162
U.S. Current Account Deficit: Old Problem, New Challenges 165
Adding the Budget Balance to the mix 169
Financing the Deficits: The Path to Unsustainability? 170
Dissecting U.S.-Bound Foreign Capital Flows 172
U.S. Stocks and Bonds Vie for Foreign Money 173
Capital Flows Shift Identities 177
Foreign Direct Investment and M&As 179
How Long Will Foreign Capital Be Available on the Cheap? 181
Don’t Ignore U.S. Investors’ Flows Abroad 182
Currency Reserve Diversification: OPEC and the Middle East 185
Further Currency Diversification Is Inevitable 187
The View Ahead 189
Chapter 8 Commodities Supercycles and Currencies 191
The Current Commodity Cycle versus Previous Cycles 193
Dissecting Commodity Classes 196
Commodities and their Currencies 207
Developing World to Maintain Ripe Outlook for Food and Grains 208
Energy Efficiency Not Enough to Halt High Oil 214
Copper and Gold to Shine on Long-Term Fundamentals 219
Commanding Heights or Common Bubbles? 223
Chapter 9 Selected Topics in Foreign Exchange 225
Revisiting Yield Curves 225
Is Dollar Stability a Necessity? 230
How Far Will Commodities Outstrip Equities? 236
U.S. Politics and the U.S. Dollar 240
Conclusion 247
Bibliography 249
About the Author 251
Index 253
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 and Laggards. 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 Trades Emerge. 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 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. Conclusion.
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. Bibliography. About the Author. Index.
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 and Laggards. 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 Trades Emerge. 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 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. Conclusion.
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. Bibliography. About the Author. Index.
Foreword xi
Preface xiii
Acknowledgments xvii
Chapter 1 Gold and the Dollar 1
End of Bretton Woods System Marks Gold’s Takeoff 2
Fed Tightening and FX Interventions Rein in Gold Rally 3
Central Banks’ Gold Sale Agreements 5
Gold-USD Inverse Relation 6
Recent Exceptions to the Inverse Rule 6
Using Gold to Identify Currency Leaders and Laggards 8
Gold’s Secular Performance 11
Valuing Currencies via Gold 13
Golden Correlations 14
Don’t Forget Falling Gold Production 16
Gold and Equities: Hard versus Monetary Assets 16
Equity-to-Gold Ratios 19
TheRoleoftheSpeculators 21
Gold Is Part of a Larger Story 22
Chapter 2 Oil Fundamentals in the Currency Market 25
From a Gold Standard to an Oil Standard (1970s–1980s) 26
Oil Glut and Price Collapse (1981–1986) 32
The Super Dollar of 1980–1984: The World’s Third Oil Shock 34
World Intervenes against Strong Dollar (1985–1987) 39
Iraq’s Invasion of Kuwait and the Gulf War (1990–1991) 41
The Asian Crisis and OPEC’s Miscalculation (1997–1998) 44
Oil Thrives on World Growth, Dot-Com Boom (1999–2000) 46
Iraq War Fuels Oil Rally, Dollar Flounders, China Takes Over (2002 to Present) 46
Summary 49
Chapter 3 When the Dollar Was King (1999–2001) 51
The Major Theories 52
Annual Performance Analysis of Individual Currencies 53
Summary 70
Chapter 4 The Dollar Bear Awakens (2002–2007) 71
2002: The Beginning of the Dollar Bear Market 71
2003: Dollar Extends Damage, Commodity Currencies Soar 78
2004: Global Recovery Boosts Currencies against U.S. Dollar 84
2005: Commodities Soar alongside Dollar, Carry Trades Emerge 90
2006: Dollar Vulnerable as Fed Ends Two-Year Tightening 94
2007: Record Oil Boosts Loonie, Helpless Fed Hits Greenback 102
Lessons Learned 108
Chapter 5 Risk Appetite in the Markets 111
Carry Trades in Foreign Exchange 112
Using Risk Appetite to Gauge FX Flows 121
Tying It All Together: 1999–2007 134
Chapter 6 Reading the Fed via Yield Curves, Equities, and Commodities 137
Yield Curves and the Economy 138
Types of Yield Curves 139
Rationale of Inverted Yield Curve Implications 142
Effectiveness of Yield Curve Signals’ Implications 142
Greenspan’s “Conundrum” Proved Bernanke’s Problem 143
Implications for Growth, Stocks, and Currencies 145
Tying Interest Rates to the Gold-Oil Ratio 153
Conclusion 158
Chapter 7 U.S. Imbalances, FX Reserve Diversification, and the U.S. Dollar 161
The U.S. Twin Deficits 162
U.S. Current Account Deficit: Old Problem, New Challenges 165
Adding the Budget Balance to the mix 169
Financing the Deficits: The Path to Unsustainability? 170
Dissecting U.S.-Bound Foreign Capital Flows 172
U.S. Stocks and Bonds Vie for Foreign Money 173
Capital Flows Shift Identities 177
Foreign Direct Investment and M&As 179
How Long Will Foreign Capital Be Available on the Cheap? 181
Don’t Ignore U.S. Investors’ Flows Abroad 182
Currency Reserve Diversification: OPEC and the Middle East 185
Further Currency Diversification Is Inevitable 187
The View Ahead 189
Chapter 8 Commodities Supercycles and Currencies 191
The Current Commodity Cycle versus Previous Cycles 193
Dissecting Commodity Classes 196
Commodities and their Currencies 207
Developing World to Maintain Ripe Outlook for Food and Grains 208
Energy Efficiency Not Enough to Halt High Oil 214
Copper and Gold to Shine on Long-Term Fundamentals 219
Commanding Heights or Common Bubbles? 223
Chapter 9 Selected Topics in Foreign Exchange 225
Revisiting Yield Curves 225
Is Dollar Stability a Necessity? 230
How Far Will Commodities Outstrip Equities? 236
U.S. Politics and the U.S. Dollar 240
Conclusion 247
Bibliography 249
About the Author 251
Index 253
Preface xiii
Acknowledgments xvii
Chapter 1 Gold and the Dollar 1
End of Bretton Woods System Marks Gold’s Takeoff 2
Fed Tightening and FX Interventions Rein in Gold Rally 3
Central Banks’ Gold Sale Agreements 5
Gold-USD Inverse Relation 6
Recent Exceptions to the Inverse Rule 6
Using Gold to Identify Currency Leaders and Laggards 8
Gold’s Secular Performance 11
Valuing Currencies via Gold 13
Golden Correlations 14
Don’t Forget Falling Gold Production 16
Gold and Equities: Hard versus Monetary Assets 16
Equity-to-Gold Ratios 19
TheRoleoftheSpeculators 21
Gold Is Part of a Larger Story 22
Chapter 2 Oil Fundamentals in the Currency Market 25
From a Gold Standard to an Oil Standard (1970s–1980s) 26
Oil Glut and Price Collapse (1981–1986) 32
The Super Dollar of 1980–1984: The World’s Third Oil Shock 34
World Intervenes against Strong Dollar (1985–1987) 39
Iraq’s Invasion of Kuwait and the Gulf War (1990–1991) 41
The Asian Crisis and OPEC’s Miscalculation (1997–1998) 44
Oil Thrives on World Growth, Dot-Com Boom (1999–2000) 46
Iraq War Fuels Oil Rally, Dollar Flounders, China Takes Over (2002 to Present) 46
Summary 49
Chapter 3 When the Dollar Was King (1999–2001) 51
The Major Theories 52
Annual Performance Analysis of Individual Currencies 53
Summary 70
Chapter 4 The Dollar Bear Awakens (2002–2007) 71
2002: The Beginning of the Dollar Bear Market 71
2003: Dollar Extends Damage, Commodity Currencies Soar 78
2004: Global Recovery Boosts Currencies against U.S. Dollar 84
2005: Commodities Soar alongside Dollar, Carry Trades Emerge 90
2006: Dollar Vulnerable as Fed Ends Two-Year Tightening 94
2007: Record Oil Boosts Loonie, Helpless Fed Hits Greenback 102
Lessons Learned 108
Chapter 5 Risk Appetite in the Markets 111
Carry Trades in Foreign Exchange 112
Using Risk Appetite to Gauge FX Flows 121
Tying It All Together: 1999–2007 134
Chapter 6 Reading the Fed via Yield Curves, Equities, and Commodities 137
Yield Curves and the Economy 138
Types of Yield Curves 139
Rationale of Inverted Yield Curve Implications 142
Effectiveness of Yield Curve Signals’ Implications 142
Greenspan’s “Conundrum” Proved Bernanke’s Problem 143
Implications for Growth, Stocks, and Currencies 145
Tying Interest Rates to the Gold-Oil Ratio 153
Conclusion 158
Chapter 7 U.S. Imbalances, FX Reserve Diversification, and the U.S. Dollar 161
The U.S. Twin Deficits 162
U.S. Current Account Deficit: Old Problem, New Challenges 165
Adding the Budget Balance to the mix 169
Financing the Deficits: The Path to Unsustainability? 170
Dissecting U.S.-Bound Foreign Capital Flows 172
U.S. Stocks and Bonds Vie for Foreign Money 173
Capital Flows Shift Identities 177
Foreign Direct Investment and M&As 179
How Long Will Foreign Capital Be Available on the Cheap? 181
Don’t Ignore U.S. Investors’ Flows Abroad 182
Currency Reserve Diversification: OPEC and the Middle East 185
Further Currency Diversification Is Inevitable 187
The View Ahead 189
Chapter 8 Commodities Supercycles and Currencies 191
The Current Commodity Cycle versus Previous Cycles 193
Dissecting Commodity Classes 196
Commodities and their Currencies 207
Developing World to Maintain Ripe Outlook for Food and Grains 208
Energy Efficiency Not Enough to Halt High Oil 214
Copper and Gold to Shine on Long-Term Fundamentals 219
Commanding Heights or Common Bubbles? 223
Chapter 9 Selected Topics in Foreign Exchange 225
Revisiting Yield Curves 225
Is Dollar Stability a Necessity? 230
How Far Will Commodities Outstrip Equities? 236
U.S. Politics and the U.S. Dollar 240
Conclusion 247
Bibliography 249
About the Author 251
Index 253