Moghaddam Markets » carry trade http://moghaddam.org The 2008 global stock market crash and me Thu, 23 Jul 2009 07:35:35 +0000 http://wordpress.org/?v=2.8.2 en hourly 1 The Australian Dollar after the carry trade http://moghaddam.org/the-australian-dollar-after-the-carry-trade/ http://moghaddam.org/the-australian-dollar-after-the-carry-trade/#comments Wed, 15 Oct 2008 18:58:30 +0000 admin http://moghaddam.org/?p=14 The credit crisis had its effect on many currencies, but the Australian Dollar suffered among the heaviest losses. Why? Because the bursting of the credit bubble lead to deleveraging everywhere. That in turn caused traders to unwind their carry trades. Carry trades describe the action of selling a low yield currency for buying a high yield currency.

Look at this disaster:

AUD/USD

AUD/USD

Bold traders may enter a position , since the Aussie $ still yields around 5% more than the US$ and could be considered cheap now.

]]> http://moghaddam.org/the-australian-dollar-after-the-carry-trade/feed/ 1