About Currency Currents

With Currency Currents, you can stay tuned-in to our current global-macro view and our analysis of key investment themes driving currency prices.

We consistently focus on the key asset classes responsible for the flow of global capital -- including equities, fixed income, commodities and, of course, currencies.

Nothing is off limits to us in this free-wheeling look at the markets. Some days you’ll receive ramblings on trading psychology, while other days we may take an academic approach in explaining esoteric economic issues. Ultimately we have one goal in mind: to help you get a handle on the key investment themes driving global capital flow. Because if you know where the money is going, it increases the probability that your position in the market will be a profitable one.

Who is Jack the Pipper?

Jack Crooks is Black Swan Capital LLC, President and Chief Trading Officer.

Jack is founder and president of Black Swan Capital LLC. He has also operated a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. In addition, he was general partner in a firm specializing in currency futures and commodities trading. Neither firm is now in operation.

Prior to entering the investment arena, Jack worked in various corporate finance positions. He has written extensively on the subject of global currencies and international economics.

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October 2008

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Can It Be This Simple?

Posted 10:44 09 October 2008

Key News

Asian central banks on Thursday joined their western counterparts in co-ordinated cuts to interest rates in an effort to curb the risk of the credit crisis sparking a severe global recession. (FT)
Japan said on Thursday it would consider any request from South Korea for assistance, after the Korean won sank to a 10-1/2-year low, but a spokesman said Seoul had not yet asked for Asian crisis talks.

US Economic Events (WSJ):
8:30a.m. Initial Jobless Claims For Oct 4 Week: Expected: -22K. Previous: +1K.
10:00a.m. Aug Wholesale Trade: Previous: +1.4%.
10:00a.m. DJ-BTMU Business Barometer For Sep 27: Previous: -0.3%.

Quotable

“Been in this game one-hundred years, but I see new ways to lose 'em I never knew existed before.”

Casey Stengel

FX Trading –Can It Be This Simple?
As the stock market goes, so goes the euro against the US dollar. Can it be that simple? Short answer is yes. Risk aversion right now is dollar positive. And falling stocks are the best general definer of a risk adverse environment:

But, we can’t expect these correlations to hold up forever. In fact, now that we are finally beginning to see some normalization on interest rates across the major currencies i.e. differences in yield spreads fading, and the expectation that global deleveraging will be with us for a while, currencies could soon start to be valued again on individual country fundamentals, while correlations of the past cycle could break down completely.

So, it can be as easy as selling euro against the dollar as the stock market falls, and maybe today its buy the euro if the stock market bounces.

DJ Industrials vs. EURUSD 240-min:

Sooner or later the real world may close in on past seeming simplicities of correlations in the currency market. A look at some other key correlations we watch…

US$ Index vs. Gold Daily: A bit of decoupling going on here…