We kind of right the carry trades, what could be the biggest risks here?
I think it would mean the two legs. Obviously, the big legs, the dollar.
And, you know, everyone's talking about rates.
No one more dovish like head of the Fed in May.
And, you know, that sort of narrative speaks to the the only other risk then
is the other currency that the local country, the Shery Ahn.
So, you know, we've seen in the LatAm space, the Brazilian real Colombian
peso, they found put on some good runs and they're at or near the, you know,
getting back into the top half of their twelve month range.
And, you know, closer to talking about the only exception in Asia space would
be careers. Careers one way or the other.
Narrative is a little bit different. And you can see that conjecture.
There's a series of higher highs there in Dollar Korean.
And that could you know, once that mindset is
we could go for a bit of a run, there is actually a
golden cross forming in that chart. And that, you know, when that happens,
when the 50 day average goes above the 200 could really put on some runs.
Otherwise, you know, you've got currencies like
Indonesia and Higher have been great carry trades for the first quarter.
And, you know, as long as the narrative stays the same after the Fed, you know,
they can go along debating it as long as they don't turn hawkish again.
I think the carry trade largely remains intact.
You know, obviously, like I said, the exception is if something political or
maybe a little bit of a banking crisis rears its head again, where the other
dollar might come back in a favor for different reasons other than interest
rate differentials. Yeah, Michael Barr to that point you
just made there. I mean, took a carry trade, I guess in
many ways thrives when vol is low, but if that were to pick up and where where
do haven flow is good? Do we talk about the dollar yet again?
Now that perhaps awesome rates have a maybe close to peaking, if not already
peak there? Sorry.
I guess treasury yields are concerned because it's more specific.
It's a good question. It's a curious thing because in this
instance, in this cycle, I'll say this quarter, let's talk about mild recession
or that, you know, in the second half of the year, you know, if if something
would hit the fan and there was a flight to safety, I daresay that people would
choose again over anything else and and skip the dollar for that.
As I said, that backdrop of the Fed is trying to work out its own its own DAX
in order. And, you know, if they if they if that's
basically sideline the dollar, then, you know, you'll see especially from within
Japan, you'll see the yen put on quite a few runs.
It's been a few papers. We put a couple out today from banks
that I can see from current levels. I can see dollar and down to 120 in that
sort of circumstance, which, you know, I think it was, you know, maybe privately
hoping that the Fed might do a bit of heavy lifting and try and get that
dollar end up a little bit higher above 140, maybe 145.
You know, if they could maintain that hawkishness.
But I think that that ship has sailed. So, you know, when you start preparing
the market for this review that he mentioned, you know, June, June and
beyond that, would you don't see dollar and lose 15 big figures in pretty quick
time. So whether it loses loses ISE 15 from,
say, 130, that put you down to 115 quite easily.
You know, it's a bit of a people still aching to get onto that trade.
Yeah, yeah, yeah. That's quite a bit of a distance,
though. What has travelled quite a lot to the
downside is to Frank. I mean, we're coming off like 11 percent
off highs right now. Does that also speak to that same
narrative? I think it does.
I think that, you know, within Europe. Europe's got its own its own issues.
And, you know, the British got past the Credit Suisse
debacle and all that sort of thing. And it's probably little bit of a
hangover that they don't have the markets fully confident that we've done
that with the passing moment. So
there is probably still some residual positioning around that.
But, you know, in terms of divergence, like the ECB is nudged I think euro
nudged 1 10 last night. And, you know, a big level beyond that
is one 10, 33. You know, what that does is a frank.
I think if nothing else changes there, it will just be a euro move and you'll
see the franc gain with the euro as a consequence.