EM FX Carry Trade Update October 11, 2019
Select carry trades are ripping higher on the double whammy boost from hopes for a US-China trade deal, even if it proves one of narrow scope, and more concrete signs that Brexit negotiations have achieved a major breakthrough that will lead to a last-minute deal before the October 31 deadline. But there is quite a diversity of performance within the EM space that suggests EM plays not all being lumped together.
FX Update: Getting close to watershed moment for USD
Market volatility is picking up, as sterling spiked higher on an apparent Brexit negotiation breakthrough and as a steep sell-off in global safe haven bonds drove JPY and CHF lower. But it was also an interesting day for the smaller currencies, as US-China trade deal hopes and the general risk sentiment boost drove the commodity dollars, Scandies and Emerging Markets higher.
FX Breakout Monitor: Big bond yield rise weakens JPY and CHF
The freshest development over the last couple of sessions, and one that accelerated today is the weakness in the yen and the Swiss franc as global long bond yields pulled significantly higher on the session. Significant breaks in key pairs are a way off, but these two currencies are traditional sensitive to the direction of bond yields.