Commodity Trade Mantra

Posts Tagged ‘Carry Trade’

How Much More Higher Could The US Dollar Go?

The US Dollar broke out of its multi-year downtrend and soared above 100. Needless to say, the USD did in fact strengthen a lot. After that initial leg up, the dollar has remained in a consolidation range for much of 2015. Though it recently broke out of a wedge/triangle formation to the upside, it’s not yet clear if this is a definitive move higher or more consolidation.

Why QE4 Is Inevitable - What could turn Sentiment more Positive?

According to Deutsche, and soon according to virtually all sellside strategists who are slowly but surely grasping the significance of what we have been warning for month on end, QE4 is inevitable. The only problem is that when the Fed pivots from “imminent rate hike” to QE4, it will loose the last shred of credibility it had left. The Fed is now completely trapped.

Why Central Banks Need More Volatility - To Maintain Their Omnipotence

Will volatility become a policy tool? PBOC decided that enough was enough with the ever-strengthening Yuan & are trying to break the back of the world’s largest carry trade by increasing uncertainty about the currency. Central banks will need more FX & asset market volatility in order to provide low rates for an extended period.

Welcome To The Currency Wars, China's Yuan Devalues Most In 20 Years

Yuan possesses the very two qualities of a carry trade currency: High onshore interest rates & a gradual but steady appreciation trend. PBoC is capable of altering the second condition & it seems that it’s doing exactly so by reversing the appreciation trend & pushing up the volatility of the yuan.

The Emerging Market Volatility May Just Be The Beginning

The volatility in Emerging Markets which began in 2013 may just be beginning as much of the excess liquidity that went in search for yield may reverse course. During the next few months to few years, we would not be surprised to see even greater stress as more volatility returns to markets.

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