Is the Dollar the New Carry Currency?

* Commodities and Currencies - Over the last ten trading sessions, commodities (DBC) are up a whopping 8.24%.

Meanwhile, against the dollar the euro is up 3.29%; the pound is up 2.05%; the Canadian dollar is up 2.16%; the Aussie dollar is up 3.48%; and the yen is down -.43% during that same period. It used to be that you looked to USD/JPY as one indicator of the carry trade; increasingly, given low U.S. rates, USD is behaving as a carry currency. Note how stocks have been strong the last few days as traders have bought EUR/USD.

Comments

[Alex Filonov:]

Oh my! I thought that it only would happen by Jan 2009 (here). But I didn't expect it so soon. We are like Japan in 1994, but moving much faster, doing in months what Japan didn in years... Fasten you seat belts.

2008 Feb 28 12:59 PM

[Alex Filonov:]

Sorry, link should be: muddlinginvestor.blogs...

2008 Feb 28 01:00 PM

[DEcho:]

Nice article. As a European I've been borrowing in USD to finance some of my equity positions, it has worked great. One benefit is I can do tax-loss repositioning even on the positions that has not declined in USD terms.

But my sympathies goes ofcourse to the US population that sees its wealth decline compared to the rest of the world..

2008 Feb 29 11:20 AM