Filed Under:
Forex pairs in this Article »
FXstreet.com (Barcelona) - Commerzbank analyst say that carry trading is losing followers as years go by ever since the subprime crisis due to high volatility and tightening differential rates, but are opposed to the idea that the Euro will become "the new funding currency of choice for so called carry trades". We can observe the EUR upside behavior on "risk on" sentiment.

Although currently the main focus is the European crisis (structural rigidities, a heavy refinancing schedule for peripheral debt and competitiveness problems), the Eurozone is dealing with it. But the US, that has a higher aggregate government debt, is not worrying with that, being in a presidential election year.

"In the context of further easing from the Fed and another 3 year LTRO from the ECB this will help to put a floor under risk appetite, meaning that the traditional funding currencies such as the dollar could come under selling pressure and higher yielding currencies could rally", wrote Peter Kinsella, analyst at the Commerzbank, putting the EUR on the side of the rally.
comments powered by Disqus