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  • Carry Trading Danger

    Mar 21, 2012 / 7:34am / in Carry Trading, Forex Trading, Japanese Yen, Forex News

    Many are talking about how carry trades by speculators are at records highs since the financial collapse of 1998.  The Japanese Yen has an abundance of short positions as their funding cost is only .25%.  The Swiss France has also taken hard hits as

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  • Carry Trade Coming Back?

    Aug 23, 2007 / 8:31am / in Carry Trading, Interest Rates, Japanese Yen, United States Dollar, Forex News

    Financial markets look to be rebounding after their huge drops in the last couple of weeks. Markets have seen an uptick in value and, and recent news only seems to support that trend. The primary effects of this movement on the foreign exchange market have been twofold: providing the Fed with justification to slow down the easing process and giving Mrs. Watananbe the ability to resume the carry trade.

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  • Yen Resurgence is Vicious

    Aug 16, 2007 / 7:41am / in Carry Trading, Japanese Yen, Forex News

    The yen crosses are all taking a beating. After more than a year of weakness (mostly through carry trade borrowing) the Japanese yen is cleaning up. Even the US dollar, up against all the other major currencies, is not safe from the yen’s resurgence.

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  • Markets Recovering but Risk Still the Dominant Factor

    Aug 13, 2007 / 10:50am / in Carry Trading, Economics, Interest Rates, Japanese Yen, United States Dollar, Forex News

    Traders and investors in financial markets around the world are preoccupied with paring back their risk exposure.  Internationally, emerging market investments are being cut back.  In the US equities market, stocks are losing attractiveness in favor of safer Treasury bonds.  With regard to the foreign exchange market, traders are shunning the risky carry trade.  The ultimate consequences of all this activity are strong support for the US dollar and the Japanese yen and a decline in the other major currencies.

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  • Don’t Be Fooled by the Rebound in Yen Crosses

    Aug 9, 2007 / 6:52am / in Americas, Carry Trading, Japanese Yen, United States Dollar, Western Europe, Forex News

    The carry trade is not back. At all. Stay away for right now. The Dow rallied to close 150 points higher yesterday, and yen crosses followed that stock market rally. The high-yielding currencies, especially, made back a lot of their losses. But the upward movement is likely to be temporary because the current market is not conducive to the carry trade.

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  • US Dollar Sinking with Credit Market Anticipating Further Shocks

    Aug 6, 2007 / 6:54am / in Americas, Carry Trading, Interest Rates, United States Dollar, Western Europe, Forex News

    The state of the US economy is not dire, but it certainly does not bode well for the US dollar.  Job creation was at its lowest level since February, with the NFP printing at an abysmal 92K.  But even worse for the dollar is the fact that job numbers are not the cause of growth or decline in the economy.  Payrolls are a reflection of demand; as house prices depreciate and take personal income down with them, that creates less of an incentive for businesses to grow.  In recessionary times, businesses are always slow to cut jobs, as the fall in labor always lags behind the fall in production.

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  • Unraveling of the Carry Trade

    Aug 2, 2007 / 6:16am / in Asia, Carry Trading, Japanese Yen, United States Dollar, Forex News

    We’ve been talking about the carry trade unwind for the past couple of days.  The moves in the forex market yesterday and during Asian trading last night ran counter to that assumption.  There was a reversal upwards in the yen crosses, especially CADJPY, AUDJPY and NZDJPY.  The late rebound in the Dow also buoyed USDJPY

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  • International Credit Crunch Brings Risk Aversion to Forex Market

    Aug 1, 2007 / 6:50am / in Asia, Carry Trading, Japanese Yen, United States Dollar, Forex News

    A worldwide credit crunch and economic problems (mainly in the United States) have torched the equities markets for the past two weeks.  There are fears that the subprime mortgage crisis and the housing problems will escape their respective sectors and infect the market as a whole.  The losses are magnified by the uncertainty of many traders, exemplified by the VIX volatility index surging past previous levels.  As is usually the case in a situation like this, risk aversion is controlling the market.  With regard to foreign exchange trading, two phenomena emerge: a flight to safety for capi

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  • Risk Aversion and Asian Growth Compete for the Direction of the Forex Market

    Jul 30, 2007 / 7:46am / in Americas, Asia, Carry Trading, Fundamental, Japanese Yen, United States Dollar, Forex News

    Global equities markets took a beating last week. The phenomenon began in the United States (on the back of subprime mortgage concerns) and it spread to the financial markets in other countries. For the forex market, the primary impact of the losses was a return of risk-aversion. The risk appetite of currency traders has waned, and as a result, the yen-based carry trade has begun to unwind. The US dollar has also appreciated significantly as investors run to the safety of US assets.

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  • Carry Trades Unwind on Risk-Aversion

    Jul 27, 2007 / 8:34am / in British Pound Sterling, Carry Trading, Currency, Economics, Forex Trading, Fundamental, General, Japanese Yen, United States Dollar, Forex News

    Yesterday's report on the extremely sluggish U.S. housing market sent equities markets crashing, investors dumping corporate debt, and currency traders unwinding carry trades. New U.S. homes sales for June fell 6.6 percent. This number has jumped significantly from the 2.2 percent decrease in May. According to a Bloomberg article, this may be a no end to the real-estate slump.

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