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Carry Trades Bounce: How Far Could it Extend?
By DailyFX Updates | August 29, 2007
High yielding currencies ranging from the Yen crosses to the New Zealand and Australian dollars have rebounded after yesterday’s sharp losses. Although the rallies are strong, I think that it is highly unlikely that the rallies will extend beyond the August 24/27 highs (depending upon which pairs you look at). Why? Because volume is thin this week and many banks only have junior traders left on their desks. These traders are not likely to take on any new positions and are there just to monitor levels, book trades and watch for stops. Taking on risk is the last thing that senior dealers want their junior dealers to do at this time. As a result, any rebound in carry trades could be limited.
According to the latest FXCM SSI report, open interest increased over the past 24hours as nearly 70% of all USD/JPY positions is to the long side.
Tags: carry trading, forex news, forex trading
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