Carry Trade Update:

[RTFX-Trading]

[B][I]Carry Trades collapse on Friday as Risk aversion continues to dominate[/I][/B]

The Carry Trades continue to fall ahead of US market open. The US Dollar and Yen advanced against their major rivals as stocks declined in Asian trade, boosting demand for safe-haven currencies and weighing on carry trades funded in the low-yielding currencies. Higher-yielding currencies including the Euro continue to fall all throughout Friday.

Risk aversion continues to dominate markets amid growing concerns on how Greece will service its debts. The Dollar and the Yen continue to gain as declines in equity markets led investors to cut risky positions.

The Euro fell Friday as doubts resurfaced about Greece resurfacing its debt. On the other hand the Yen surged as investors are cautious about a possible revaluation of the Yuan and cut short positions ahead of the weekend. Fueling concerns are reports of European Policy makers and Finance Ministers meeting to discuss the €45B bailout plan for Greece in Madrid, after Greece had reportedly asked on Thursday for talks with European authorities and the International Monetary Fund, a step toward Athens obtaining support via an aid plan agreed last weekend.

The single currency is the biggest ‘losers’ so far among ‘carry trade’ currency pairs. It is down 0.86% so far against the Yen to 125.17. The Aussie (AUD), Sterling, Kiwi (NZD) and Canadian Dollar are also down to 0.82%, 0.87%, 0.27% and 0.62% respectively against the Yen.

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Emman Xuereb
Trading Desk
RTFX Ltd
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