The late-July, early-August credit concerns surrounding U.S. sub-prime loans sparked unwinding of global carry trades and saw a sharp drop in euro/Swiss from 1.6688 in late July to as low as 1.6308 in early August.
“It sold off three big figures,” Powell says. “That was a big move.”
A key factor for the Swiss franc will be carry-trade action. The question for currency traders to consider: Is the latest retreat in euro/Swiss the result of a temporary unwind in the carry trade, or something more sustainable? “
A return to normal conditions in the market would likely see a return to Swiss weakness,” Powell concludes.
Subscribe to:
Post Comments (Atom)
Post a Comment