EMERGING MARKET
CARRY TRADE
WEAKENS USD

By
www.TheForex
NittyGritty.com
CURRENCY SPECULATORS
ARE STARTING TO BET
AGAINST THE USD IN THE
COMING MONTHS.

http://www.the
forexnittygritty.
com/forex...
AN EMERGING MARKET
CARRY TRADE WEAKENS
THE USD BUT OTHER
FACTORS ARE AT FAULT.

http://www.the
forexnittygritty.
com/forex...
FIRST OF ALL, FOR
MANY, THE USD IS NO
LONGER A SAFE HAVEN
CURRENCY.

http://www.the
forexnittygritty.
com/forex/em
erging-...
ALTHOUGH THE POLITICAL
GAME PLAYING THAT
BROUGHT THE USA TO THE
BRINK OF DEFAULT ON ITS
DEBTS IS TEMPORARILY
QUIET MANY AR...
TO THE EXTENT THAT
POLITICAL GAMESMANSHIP
DRIVES THE USD
FUNDAMENTAL ANALYSIS
OF FOREX PAIRS IS
DIFFICULT TO IMPOSSIBLE
WH...
AND, MANY EMERGING
MARKETS ARE RAISING
INTEREST RATES IN ORDER
TO ATTRACT CAPITAL.

http://www.the
forexnittygritty.
com/f...
TRADERS MOVE CAPITAL
OUT OF LOW INTEREST
RATE MARKETS INTO HIGH
INTEREST RATE ONES.

http://www.the
forexnittygritty.
com/...
THIS AMOUNTS TO A CARRY
TRADE AND AN EMERGING
MARKET CARRY TRADE
WEAKENS THE USD.

http://www.the
forexnittygritty.
com/fo...
US INTEREST RATES WILL
STAY DOWN UNTIL THE
ECONOMY STARTS TO
MEND MORE THOROUGHLY
AND THE FED CUTS BACKS
ON ITS QUANTITATI...
THE LONG TERM

http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd
HOWEVER, THE RECURRING
ISSUE OF POSSIBLE
SOVEREIGN DEBT DEFAULT
IS A SERIOUS ONE FOR THE
USA.

http://www.the
forexnittygr...
IT COULD END UP LIKE THE
STORY OF THE BOY WHO
CRIES WOLF TOO MANY
TIMES.

http://www.the
forexnittygritty.
com/forex/em
er...
EVENTUALLY PEOPLE WILL
START IGNORING THE USA
AND BANKING THEIR
RESERVES IN OTHER
CURRENCIES.

http://www.the
forexnittygr...
WHEN NO ONE SHOWS UP
TO PURCHASE US DEBT
THE RATES WILL GO UP
UNLESS THE COUNTRY
LEARNS TO LIVE WITHIN ITS
MEANS.

http://...
THE LONG TERM ISSUE IS
STILL THE HUGE US DEBT
BURDEN.

http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -...
ALTHOUGH CURRENCY
TRADERS TODAY ARE
FOCUSING ON HIGHER
INTEREST RATES IN
OFFSHORE ECONOMIES
THE LONGER TERM FOCUS
MAY BE A...
WHILE AN EMERGING
MARKET CARRY TRADE
WEAKENS THE USD TODAY
NOT DEALING WITH THE
DEBT BURDEN AND SHORT
SIGHTED POLITICS IS
...
IF THAT IS THE CASE THOSE
USD ASSETS THAT ARE
CONVERTED TO
REALES, COLONES, VARIOU
S
PESOS, RUBLES, YUAN, RA
ND, AND RUPEE...
TRADING TODAY AS AN
EMERGING MARKET CARRY
TRADE WEAKENS THE USD

http://www.the
forexnittygritty.
com/forex/em
erging-mark...
THE COUNTRIES WHERE
THIS TACTIC WILL WORK
WILL BE THOSE WHOSE
CURRENCIES SUFFERED
MOST IN MIDSUMMER SELLOFFS.

http://www....
THESE INCLUDE THE INDIAN
RUPEE, THE INDONESIAN
RUPIAH, THE SOUTH
AFRICAN RAND, THE
BRAZILIAN REAL, AND THE
TURKISH LIRA.

...
AS ALWAYS TIMING IS
IMPORTANT AND FACTORS
CAN CHANGE.

http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -...
KEEP AN EYE ON CHINA AS
THEIR DEBT STRUCTURE IS
STILL SUSPECT AND THEIR
EXPORTS ARE FALLING AS
EUROPE AND NORTH
AMERICA AR...
AND WHEN THE FED ACTS
TO EASE QUANTITATIVE
EASING AND INCREASED
BOND YIELD DRIVE THE
DOLLAR HIGHER THE
SHORT TERM SITUATIO...
AS ALWAYS DO YOUR OWN
HOMEWORK AND DO NOT
BE AFRAID TO SIT OUT A
TRADE THAT YOU DO NOT
UNDERSTAND.

http://www.the
forexni...
Emerging Market Carry Trade Weakens USD
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Emerging Market Carry Trade Weakens USD

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Emerging Market Carry Trade Weakens USD

Currency speculators are starting to bet against the USD in the coming months. An emerging market carry trade weakens the USD but other factors are at fault. First of all, for many, the USD is no longer a safe haven currency. Although the political game playing that brought the USA to the brink of default on its debts is temporarily quiet many are concerned that this is just the lull before the next storm. To the extent that political gamesmanship drives the USD fundamental analysis of Forex pairs is difficult to impossible when half of the trade is the USD. As money moves to other currencies it drives the value of the USD down. And, many emerging markets are raising interest rates in order to attract capital. Traders move capital out of low interest rate markets into high interest rate ones. This amounts to a carry trade and an emerging market carry trade weakens the USD. US interest rates will stay down until the economy starts to mend more thoroughly

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Transcript of "Emerging Market Carry Trade Weakens USD"

  1. 1. EMERGING MARKET CARRY TRADE WEAKENS USD By www.TheForex NittyGritty.com
  2. 2. CURRENCY SPECULATORS ARE STARTING TO BET AGAINST THE USD IN THE COMING MONTHS. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  3. 3. AN EMERGING MARKET CARRY TRADE WEAKENS THE USD BUT OTHER FACTORS ARE AT FAULT. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  4. 4. FIRST OF ALL, FOR MANY, THE USD IS NO LONGER A SAFE HAVEN CURRENCY. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  5. 5. ALTHOUGH THE POLITICAL GAME PLAYING THAT BROUGHT THE USA TO THE BRINK OF DEFAULT ON ITS DEBTS IS TEMPORARILY QUIET MANY ARE CONCERNED THAT THIS IS JUST THE LULL BEFORE THE NEXT STORM. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  6. 6. TO THE EXTENT THAT POLITICAL GAMESMANSHIP DRIVES THE USD FUNDAMENTAL ANALYSIS OF FOREX PAIRS IS DIFFICULT TO IMPOSSIBLE WHEN HALF OF THE TRADE IS THE USD. AS MONEY MOVES TO OTHER CURRENCIES IT DRIVES THE VALUE OF THE USD DOWN. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  7. 7. AND, MANY EMERGING MARKETS ARE RAISING INTEREST RATES IN ORDER TO ATTRACT CAPITAL. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  8. 8. TRADERS MOVE CAPITAL OUT OF LOW INTEREST RATE MARKETS INTO HIGH INTEREST RATE ONES. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  9. 9. THIS AMOUNTS TO A CARRY TRADE AND AN EMERGING MARKET CARRY TRADE WEAKENS THE USD. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  10. 10. US INTEREST RATES WILL STAY DOWN UNTIL THE ECONOMY STARTS TO MEND MORE THOROUGHLY AND THE FED CUTS BACKS ON ITS QUANTITATIVE EASING PROGRAM WHICH IN TURN HOLDS INTEREST RATES DOWN. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  11. 11. THE LONG TERM http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  12. 12. EVERY TRADER HAS ONE EYE ON THE US FED TO SEE WHEN THEY REDUCE THE $85 BILLION A MONTH STIMULUS PROGRAM AS DOING SO WILL DRIVE UP US TREASURY INTEREST RATES AND THE VALUE OF THE US DOLLAR. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  13. 13. HOWEVER, THE RECURRING ISSUE OF POSSIBLE SOVEREIGN DEBT DEFAULT IS A SERIOUS ONE FOR THE USA. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  14. 14. IT COULD END UP LIKE THE STORY OF THE BOY WHO CRIES WOLF TOO MANY TIMES. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  15. 15. EVENTUALLY PEOPLE WILL START IGNORING THE USA AND BANKING THEIR RESERVES IN OTHER CURRENCIES. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  16. 16. WHEN NO ONE SHOWS UP TO PURCHASE US DEBT THE RATES WILL GO UP UNLESS THE COUNTRY LEARNS TO LIVE WITHIN ITS MEANS. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  17. 17. THE LONG TERM ISSUE IS STILL THE HUGE US DEBT BURDEN. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  18. 18. ALTHOUGH CURRENCY TRADERS TODAY ARE FOCUSING ON HIGHER INTEREST RATES IN OFFSHORE ECONOMIES THE LONGER TERM FOCUS MAY BE AWAY FROM THE USD. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  19. 19. WHILE AN EMERGING MARKET CARRY TRADE WEAKENS THE USD TODAY NOT DEALING WITH THE DEBT BURDEN AND SHORT SIGHTED POLITICS IS LIKELY TO DAMAGE THE USD MORE SEVERELY IN THE LONG TERM. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  20. 20. IF THAT IS THE CASE THOSE USD ASSETS THAT ARE CONVERTED TO REALES, COLONES, VARIOU S PESOS, RUBLES, YUAN, RA ND, AND RUPEES MAY NEVER COME BACK. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  21. 21. TRADING TODAY AS AN EMERGING MARKET CARRY TRADE WEAKENS THE USD http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  22. 22. THE COUNTRIES WHERE THIS TACTIC WILL WORK WILL BE THOSE WHOSE CURRENCIES SUFFERED MOST IN MIDSUMMER SELLOFFS. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  23. 23. THESE INCLUDE THE INDIAN RUPEE, THE INDONESIAN RUPIAH, THE SOUTH AFRICAN RAND, THE BRAZILIAN REAL, AND THE TURKISH LIRA. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  24. 24. AS ALWAYS TIMING IS IMPORTANT AND FACTORS CAN CHANGE. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  25. 25. KEEP AN EYE ON CHINA AS THEIR DEBT STRUCTURE IS STILL SUSPECT AND THEIR EXPORTS ARE FALLING AS EUROPE AND NORTH AMERICA ARE NOT COMING BACK ON LINE AS THE PATRONS OF CHEAP PRODUCTS FROM CHINA THAT THEY ONCE WERE. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  26. 26. AND WHEN THE FED ACTS TO EASE QUANTITATIVE EASING AND INCREASED BOND YIELD DRIVE THE DOLLAR HIGHER THE SHORT TERM SITUATION WILL CHANGE. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd
  27. 27. AS ALWAYS DO YOUR OWN HOMEWORK AND DO NOT BE AFRAID TO SIT OUT A TRADE THAT YOU DO NOT UNDERSTAND. http://www.the forexnittygritty. com/forex/em erging-marketcarr y -tradeweakens-usd

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