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AUDJPY Carry Trade Just Got More Attractive

Overnight the AUDJPY carry trade play just got a little more attractive as the Australian central bank pushed up rates another quarter point to 4.75% (examples of the AUDJPY carry trade).  The rate push by the bank was made in an effort to keep control of inflation in the country according to statements made.

This comes at a time when there is a great deal of concern globally as to the pace and nature of the current economic recovery.  Those believing the nascent recovery is coming along at its own pace might welcome the rate increase as a sign that at least somewhere in the world demand pressure is creating some inflation.  The rest of the world continues to act as though the economy is in a world wide death spiral.

Who's right?  Who's wrong?  Who cares - the carry trade in AUDJPY just got better for those who know how to play it.  Folks might consider the interest rate differential of the South African Rand vs. JPY as well.

Disclosure: No positions at time of writing