Comments on: “Chart view” of Australia

By: Riz Din

Riz Din — Wed, 15 Oct 2008 09:54:27 +0000

Thanks for popping by my non-trading blog folks. My trading days are no more, but I may write a little something on currencies every now and then. I’ll always have one eye on the markets though, and will continue to read your blogs with interest. Keep carrying that torch, independent traders!

By: Gav

Gav — Tue, 14 Oct 2008 00:22:14 +0000

I agree,carry trade will be back. But the question is, how long does it take for this chaos to settle. In fact, I reckon carry trade is an indicator of the stability of currencies market.

Rizdin, the real man fraternity, I have been reading it recently, frequently!

By: jay

jay — Mon, 13 Oct 2008 23:55:29 +0000

Scary chart. But my guess (I’m nearly certain, actually) is the carry will return, under these conditions:

(1) Diverging interest rate differentials,
(2) Increasing appetite for risk, and
(3) Low volatility.

And a few other things besides, like “orderly” markets (whatever those are) and discernible trends that either add direct value or allow accruing interest to add value to the position without incurring significant drawdowns.

At some point, perhaps in the near future, I’m confident the carry will again emerge as a viable trade.

The comment making the distinction between wealth transfer vs. wealth destruction makes me hope C will continue to blog on currencies at RizDin…if not at the3500.

Anyway, my two pips.

By: Caravaggio

Caravaggio — Mon, 13 Oct 2008 21:30:18 +0000

Definitely agree. If anything, every one is cleaned out and the process could start over again. I reckon interest rates as drivers of currency appreciation will reassert once things settle out of chaos mode, and carry traders will jump back in to the trade. From this point, I can see low leverage carry trade positions holding quite well as long term investments.

By: Gav

Gav — Mon, 13 Oct 2008 10:27:10 +0000

But, should we call it (carry trade) a failure now? Maybe not. It just get ugly, really ugly at the moment. It is still too early to conclude.