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by Ashraf Laidi
Posted: May 28, 2009 15:40
Comments: 129
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This thread was started in response to the Article:

Yield Shoots, Dollar Leaves

Soaring yields give no choice to the Fed but to increase the quantity of bond purchases at the expense of the dollar. Speculative Forex positions agree.
 
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Ashraf Laidi
London, UK
Posts: 0
15 years ago
Jun 10, 2009 7:37
Rob, i hope you didnt short that GBPJPY?

Ashraf
Ashraf Laidi
London, UK
Posts: 0
15 years ago
Jun 9, 2009 23:09
spec. good points. markets are struggling to make sharp gains but also reluctant to make the panic selloffs of last Q4 and Q1 as the Govt and the Fed is doing lots of hand-holding. Thus, we wont have those attacks of deleveraging. Instead, the economic deleveraging has yet to play out. But as i said, in periods of neutral risk appetite, FX traders wont hesitate for a minute to sell the dollar.

i see a an L-shaped recovery

Ashraf
speculator
Posted Anonymously
15 years ago
Jun 9, 2009 21:27
the markets seem to be more confusing now than ever. but what i am sensing from quite a lot of sources is that risk aversion is likely to come about again. However, panic selling can probably be ruled out now as governments will back up the banks. the next fundamental weighing in on equities will be bond market shocks. dollar libor rates are rising which could lead to higher interest rate expectations and curb stock advances.

As we saw today, sterling benefited from house price positiveness and this fundamental will continue to heavily influence sterling's trend. Therefore if you believe house prices will reverse its recent trend and decline at a somewhat greater and/or longer way, then bet against the pound vs dollar for a longer term trade.

the question is will get a V, L, W or WL recession. seems like markets are pricing in a V.
Ashraf Laidi
London, UK
Posts: 0
15 years ago
Jun 9, 2009 20:21
Rob, be careful, Asian markets tend to need MORE than just -15 pts in the Dow for them to sell-off. They're in better shape than in the US. They need something like last Friday when Dow futures started off +110 pts and ended +12 or 11 pts which is a very bad transition. ALWAYS LOOK AT THE OPEN AND THE CLOSE AND NOT ONLY AT THE CLOSE. if dow today closes +15 pts do not say thats very bad because the Dow was -30 pts or so earlier in the day. Id be more of a seller of NZDUSD than of GBPJPY.

Ashraf
Rob
New York, United States
Posts: 305
15 years ago
Jun 9, 2009 20:17
Hey Ashraf,

How do you feel about shorting GBP/JPY at these levels IF equities close in the red? Any expectations for the Asian markets? - looks like GBP/JPY might be topping out right now. Thanks
Ashraf Laidi
London, UK
Posts: 0
15 years ago
Jun 9, 2009 9:40
Qin, maybe you're right. The overall uptrend in commondity currencies could continue despite periodic declines. So those who stay long these currencies must have some wide stops and sufficient margin. Always key.

Ashraf
Qin
Jonkoping, Sweden
Posts: 492
15 years ago
Jun 9, 2009 0:25
Hey, Ashraf
I know this theory. But I don't rally think the stock will fall sharply. and it may just stay there, because FED don't want stock fall again.

So I think that maybe the commodity currency will keep rising.

Best regards
Qin
Ashraf Laidi
London, UK
Posts: 0
15 years ago
Jun 9, 2009 0:01
Qin, let me clarify: if stocks continue to FALL , dollar usually STRENGTHENS primarily vs AUD, NZD, CAD and also against EUR and CAD. It is important to understand this. When stocks lose sharply, USDCAD goes UP (USD rises CAD falls). Falling stocks = RIsk Aversion = Falling Risk Appetite. Please refer to past articles in the website. All of this in chapter 5 of my book. Also in my ONLINE WORKBOOK found here http://www.ashraflaidi.com/products/wb01/

Ashraf
Qin
Jonkoping, Sweden
Posts: 492
15 years ago
Jun 8, 2009 23:46
Hey, Ashraf
Thank you for replying me so quickly.

I agree with you that Stock market is out of its strength and become to fade little by little.
But the stock market is highly protected by FED now. I doubt that stock market will have a big correction soon. Shorting stock index and shorting oil will be a very dangerous play.
They can't let stock market fail again......they have poured so much printed money into it, and they will keep doing it.

But if the stock market is going to have a correction, I think it will be the best chance to short USD and long CAD and AUD.

Best regards
Qin
Ashraf Laidi
London, UK
Posts: 0
15 years ago
Jun 8, 2009 23:26
Qin, the idea of selling NZDUSD is based on selling high yielding currencies vs USD as stocks fall. This is a basic idea long repeated in this website, my book and my Workbook. You could sell Aussie, sterling etcc. The key is WHERE do you place these shorts. Overall, dollar downtrend seems intact, but stocks cannot rise 3 or 4 days in a row and therefore one must take advantage of these interim opportunities.

Rob, or, maybe the new low in USDJPY is coming up in Q4 and we could sell USDJPY from here at the highs. As short term yields rally (due to supposedly better than exp payrolls), the yields feed into the calculation that there will be a rate hike soon, hence, January. But also know that these fed futures expectations change according to the data at hand.

Ashraf
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