A Thought on the Dollar Carry Trade…
Why is the stock market not plummeting while the US dollar index gets stronger?
Well, maybe it’s because the dollar carry trade is being replaced by the Yen carry trade?
Since November 30 the Yen rose from 86.28 to 89.86 to the dollar. At the same time, the US dollar index jumped from 74.50 to 77.09.
So the charts confirm my suspicion. It also means that the dollar can move higher without affecting the stock market much.
The move to the Yen is justified since Japan is suffering deflation and will keep interest rates low for a really, really long time. And by this time next year, US rates will probably be higher.
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Great article . Will definitely copy it to my website.