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Book Review: Currency Trading and Intermarket Analysis by Ashraf Laidi

Five things you should know about Ashraf Laidi’s book called Currency Trading and Intermarket Analysis

Why do you need this book? Well, in a nutshell, it offers comprehensive tools to manoeuvre through the macroeconomic and financial markets. It helps the reader to understand the flows in commodity, equity and bond markets into currency dynamics. It also examines the principal drivers of the central bank policy.

1.This book talks about how the financial markets are linked. Currency trading is always in a constant change, or moving in a state of flux. We do not know how or can predict how curren- cies are going to perform in the short and long term. To this end, it might be difficult to make sense of the currency market, and at the same time see the inter-connectively of interest rates, equities and commodities but this book addresses the issues.

2.CMC Markets’ chief market strategist, Ashraf Laidi, gives readers an insight into the mechanics of the currency markets. He shows turning points in the currency and equity indices by predicting changes in interest rates from central banks.

3. Ashraf introduces a historical look at the relationship between gold and the US dollar, and explains the gold-based approach to determining the value of all the major currencies. He stresses the importance of how gold performs against other commodities, citing examples in 2003, 2004 and 2007, whereby other commodities rallied in tandem with the increase in the price of gold, subjecting the US dollar to secular pressure.

4.This book takes a quantitative approach in ranking the major foreign exchanges between 1999 and 2007 in relative and absolute terms, and highlighting the fundamentals underpin- ning currency performances. A wide range of variables is discussed including national and world GDP growth, interest rates, capital flows, external balances, risk appetite, commodity, and equity markets. More over, Ashraf also provides an account of the major theories of inter- national economies to explain foreign exchange market values.

5. Finally, the book emphasises the importance of understanding the price of money. Inves- tors can assess the future moves in interest rates by dissecting the interaction between short-and long-term interest rates and how their co-movements intereact with the economy, stock market, and currency. Comparing interest rate patterns and cross-market develop- ments can pay major returns for the investor.

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