REGIONAL CURRENCY

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TRENDS
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Kevin Lau , CMT
FX Application Specialist
 Agenda
DETERMINING THE DIRECTION OF USD
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INTER-MARKET REPRODUCE,
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Inter-market Relationship

USD Index Commodity Price -- Bond Price Stock Price

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USD
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INDEX
BOND
PRICE PRIOR
STOCK
PRICE

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COMMODITY
PRICE BOND STOCK
PRICE PRICE
BOND
YIELD Deflationary period
Summary of Inter-market relationship
USD Index falls - Commodity price rise

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inflationary
( interest rates rise to combat)
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Commodity Price rise
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Price falls
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Bond price fall
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- Stock price fall

Commodity peaks (bottoms) followed by

Bond Price peaks (bottoms) followed by
Stock price peaks (bottoms)
 Dollar Index vs Commodity ( DXY INDEX / CCI INDEX)

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 Commodity vs Bond Yield ( rise and fall together)

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Peaked later
Peaked on
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 Commodity vs Bond Price (inverse relationship)

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Price Bottom After

 Commodity Peak signals Bond Price Peak and
Stock Price Peak to follow ( 1987 crash)

Commodity Peak
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1987 Crash

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Topping sequence in action ( 2000 crash)

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Commodity
Peak
Bond Peak Stock Peak

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2007 Credit Crisis Deflationary

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Commodity

Bond

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 Scenario as of April 1, 2013

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Commodity Bond Peaking ? Stock to peak
Peaking? later

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 How market evolved since April 2013

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Fed tapering
? Bond price
Lower
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Fed tapering
? Bond price
Lower
Commodities
Commodities
lower?
lower?
 HARD OR SOFT ASSET

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2011
 BOND OR STOCKS

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 DOLLAR INDEX RELATIONSHIP WITH STOCK INDEX

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SP500
INDEX

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DXY
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INDEX
 Stock heads higher before peaking
USD might break out from triangle ( HIGHER? )

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 REGIONAL CURRENCY TREND

STOCKS MIGHT PERFORM BETTER THAN

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ASSET CLASS
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SEEN REGIONAL STOCK MARKETS TAKE A
CONSENT OF THE
BEATING ? WHY
AUTHOR
 Foreign Institutional Investment in Equities

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 FUND FLOWS IN THAILAND AFFECTS THB

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USD/ THB
 FUND FLOW - OUT FROM REGIONAL STOCK INTO USA ?
SET INDEX versus SP500 INDEX

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INDEX

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SET
INDEX
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June
DO NOT COPY, REPRODUCE, Ratio chart of JCI /SP500

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Ratio chart of SET/ SP500
 NDF 1M BY 3M CALENDAR SPREAD PROVIDED CLUE TO
USD PURCHASE AGAINST IDR

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DO NOT COPY, REPRODUCE,
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 BEYOND TRADE IDEA GENERATION

1) FX ELECTRONIC TRADING - STREAMING

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2) CHARTING PACKAGE - CUSTOM INDICATORS
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BACKTESTING

3) FX OPTIONS - PRICING
- PORTFOLIO RISK AND MTM
 Any questions, please contact:

DOKevin
NOTLauCOPY, REPRODUCE,
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+65.6212.1321WITHOUT PRIOR
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E: klau8@bloomberg.net
 THANK YOU
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