The US Dollar continued its rise with yields and safe haven sanctuary in 2024, thwarting the BRICS declaration of the end of the greenback. It remained a source of stability as instability attained momentum globally at the “periphery.” The dollar also got sought for carry trades such as the Japanese Yen and Mexican peso though these featured their own moments of extreme volatility. Yen weakness provided key support to dollar melt-up dynamics with BOJ slow-motion “normalization” in a world of … Continue reading “The US Dollar Flexed Last Year, What is Ahead?”
Understanding Carry Trade Risk, a BOJ Yen Case Study
When markets get all one way, over leveraged and participants drinking the same cool aid any quiver against the grain can quickly become a shake. Essentially the carry trade is funding an investment from a cheaper source, in this case the Yen with negative interest rates and buying an asset with positive returns. The deeper and longer the carry trade goes on the natural motives of risk and greed entwine and when it goes wrong is amplified in low liquidity … Continue reading “Understanding Carry Trade Risk, a BOJ Yen Case Study”