Three Ms Currency Market
-
date post
21-Oct-2014 -
Category
Business
-
view
911 -
download
0
description
Transcript of Three Ms Currency Market
![Page 1: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/1.jpg)
3 M’s that Move the Currency Market
Boris SchlossbergDirector of Currency Research
![Page 2: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/2.jpg)
• GFT refers to Global Futures & Forex, Ltd. and all of its divisions, branches and subsidiaries, including Global Forex Trading, GFT Global Markets Asia Pte. Ltd. and GFT Global Markets UK Limited. In the United Kingdom, GFT Global Markets UK Limited is authorized and regulated by the United Kingdom Financial Services Authority. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful. Trading of foreign exchange contracts, contracts for differences, derivatives and other investment products which are leveraged, can carry a high level of risk, and may not be suitable for all investors. It is possible to lose more than the initial investment. In Australia, GFT means Global Futures & Forex, Ltd. ARBN 103 508 461, AFS License 226625. A Product Disclosure Statement (PDS) is available at www.gft.com.au. You should read and consider the PDS before making any decision to deal in GFT products. This [advertisement] is published by GFT Global Markets Asia Pte. Ltd. (Company Registration Number 200717665N) in Singapore for informational purposes only and is not an offer or a solicitation to deal in any investment product or to enter into any legal relations, nor an advice or a recommendation with respect to such investment product. © 2009 Global Futures & Forex, Ltd. All rights reserved. CD08BKU.003.021809
• DISCLAIMER: This presentation and the information provided here should not be relied upon as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this presentation for your general information. This presentation and its information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision based upon this presentation or any information contained within. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading, Boris Schlossberg, and Kathy Lien will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this presentation. Global Forex Trading, Boris Schlossberg, and Kathy Lien do not render investment, legal, accounting, tax or other professional advice. If such advice is sought, or other expert assistance is required, the services of a competent professional should be sought
Disclaimer
![Page 3: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/3.jpg)
The 3 M’s
Macro
Micro
Monetary Policy
![Page 4: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/4.jpg)
Macro Factors
Macro Political Conflict
Equities and Risk Appetite
Oil and Gold
![Page 5: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/5.jpg)
Risk Appetite
•EUR/JPY vs. DJIA
•Risk On! Risk Off!
Source: DealBook 360
![Page 6: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/6.jpg)
Correlation: SP500 & USD/JPY
Blue Line = USD/JPY
Red Line = SP500
Weekly Chart
Source: GFT Source: DealBook 360
![Page 7: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/7.jpg)
Correlation: SP500 & USD/JPY
Blue Line = USD/JPY
Red Line = SP500
Hourly Chart
Source: DealBook 360
![Page 8: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/8.jpg)
Oil
• Oil vs. USD/CAD
•Inverse correlation
Source: Bloomberg
![Page 9: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/9.jpg)
Geopolitics
• Currency markets avoid political risk
• Sell first, ask questions later
• Capital seeks stability
Source: DealBook 360
Source: DealBook 360
![Page 10: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/10.jpg)
Gold
AUD/USD and Gold: Ignore the divergence at your own risk?
Source: DealBook 360
![Page 11: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/11.jpg)
Micro Factors
Key Micro Data NFP (Labor Data)
ISM (Manufacturing and Services Data)
Inflation
Sentiment
![Page 12: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/12.jpg)
Labor Data
Why is labor so critical to the economy?
• Jobs = Greater Income = Greater Spending = Greater Growth
• In G-3 economies the consumer represents between 60%-70% of GDP
![Page 13: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/13.jpg)
Labor Data – US Unemployment Rate
Source: Bloomberg
![Page 14: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/14.jpg)
Labor Data – EZ Unemployment Rate
Source: Bloomberg
![Page 15: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/15.jpg)
Source: Bloomberg
Labor Data: German Unemployment Rolls
![Page 16: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/16.jpg)
ISM and PMI Surveys Measure Health of Business
> 50 Generally Means Expansion
< 50 Suggests Contraction
ISM/PMI – State of Business
![Page 17: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/17.jpg)
Source: Bloomberg
Production Data – US Manufacturing ISM
![Page 18: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/18.jpg)
Source: Bloomberg
Production Data – US Services ISM
![Page 19: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/19.jpg)
Source: Bloomberg
Production Data – EZ Composite PMI
![Page 20: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/20.jpg)
Inflation is the Key Driver of Interest Rates
All things being equal:
• Hotter inflation generally leads to higher interest rates
• Higher rates generally lead to higher currency
Inflation – The Bane of CB’s
![Page 21: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/21.jpg)
Source: Bloomberg
US Headline CPI
![Page 22: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/22.jpg)
Source: GFT
CPI vs Oil
![Page 23: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/23.jpg)
Source: Bloomberg
EZ Headline CPI
![Page 24: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/24.jpg)
Sentiment Can Create Its Own Reality
Cautionary attitude could lead to retrenchment in spending and ultimately deceleration of growth.
The Power of Sentiment
![Page 25: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/25.jpg)
Source: Bloomberg
US U of Mich
![Page 26: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/26.jpg)
German IFO
Source: Bloomberg
![Page 27: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/27.jpg)
Monetary Policy
Monetary Policy Know The Players
Know The Mandates
Prepare Properly
![Page 28: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/28.jpg)
Ben Bernanke
The Academic
Believes in Transparency
Has Only Presided Over Rate Cuts
![Page 29: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/29.jpg)
Jean Claude Trichet
The Godfather
Price Stability Drives Policy
Too inflexible?
![Page 30: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/30.jpg)
Masaaki Shirakawa
The Conformist
Hemmed in by Stagnant Economy
Rising Yen
![Page 31: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/31.jpg)
Mervyn King
The Gentleman Banker
Caught Between a Rock and a Hard Place
![Page 32: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/32.jpg)
Jean Pierre Roth
The Conservative Swiss
![Page 33: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/33.jpg)
Mark Carney
The Newcomer
![Page 34: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/34.jpg)
Glenn Stevens
The Tough Veteran
![Page 35: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/35.jpg)
Allan Bollard
The Hawk
![Page 36: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/36.jpg)
Macro Trade Example
Macro Trade Dow drops, EUR/JPY follows
Source: DealBook 360
![Page 37: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/37.jpg)
Micro Trade Example
Micro Trade EZ Trade Balance: -6.4B vs. -5.8 forecast
Source: DealBook 360
![Page 38: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/38.jpg)
Monetary Policy Trade Example
Monetary Policy Trade RBA Cuts Rate by 100 bp
Source: DealBook 360
![Page 39: Three Ms Currency Market](https://reader033.fdocuments.in/reader033/viewer/2022061106/5446e99eafaf9f55178b47e0/html5/thumbnails/39.jpg)
• GFT refers to Global Futures & Forex, Ltd. and all of its divisions, branches and subsidiaries, including Global Forex Trading, GFT Global Markets Asia Pte. Ltd. and GFT Global Markets UK Limited. In the United Kingdom, GFT Global Markets UK Limited is authorized and regulated by the United Kingdom Financial Services Authority. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful. Trading of foreign exchange contracts, contracts for differences, derivatives and other investment products which are leveraged, can carry a high level of risk, and may not be suitable for all investors. It is possible to lose more than the initial investment. In Australia, GFT means Global Futures & Forex, Ltd. ARBN 103 508 461, AFS License 226625. A Product Disclosure Statement (PDS) is available at www.gft.com.au. You should read and consider the PDS before making any decision to deal in GFT products. This [advertisement] is published by GFT Global Markets Asia Pte. Ltd. (Company Registration Number 200717665N) in Singapore for informational purposes only and is not an offer or a solicitation to deal in any investment product or to enter into any legal relations, nor an advice or a recommendation with respect to such investment product. © 2009 Global Futures & Forex, Ltd. All rights reserved.
• DISCLAIMER: This presentation and the information provided here should not be relied upon as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this presentation for your general information. This presentation and its information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision based upon this presentation or any information contained within. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading, Boris Schlossberg, and Kathy Lien will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this presentation. Global Forex Trading, Boris Schlossberg, and Kathy Lien do not render investment, legal, accounting, tax or other professional advice. If such advice is sought, or other expert assistance is required, the services of a competent professional should be sought. CD08BKU.003.021809
Disclaimer