http://www.theforexnittygritty.com/forex/emerging-market-carry-trade-weakens-usd Emerging Market Carry Trade Weakens USD Currency speculators are starting to bet against the USD in the coming months. An emerging market carry trade weakens the USD but other factors are at fault. First of all, for many, the USD is no longer a safe haven currency. Although the political game playing that brought the USA to the brink of default on its debts is temporarily quiet many are concerned that this is just the lull before the next storm. To the extent that political gamesmanship drives the USD fundamental analysis of Forex pairs is difficult to impossible when half of the trade is the USD. As money moves to other currencies it drives the value of the USD down. And, many emerging markets are raising interest rates in order to attract capital. Traders move capital out of low interest rate markets into high interest rate ones. This amounts to a carry trade and an emerging market carry trade weakens the USD. US interest rates will stay down until the economy starts to mend more thoroughly

1. EMERGING MARKET
CARRY TRADE
WEAKENS USD
By
www.TheForex
NittyGritty.com

2. CURRENCY SPECULATORS
ARE STARTING TO BET
AGAINST THE USD IN THE
COMING MONTHS.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

3. AN EMERGING MARKET
CARRY TRADE WEAKENS
THE USD BUT OTHER
FACTORS ARE AT FAULT.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

4. FIRST OF ALL, FOR
MANY, THE USD IS NO
LONGER A SAFE HAVEN
CURRENCY.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

5. ALTHOUGH THE POLITICAL
GAME PLAYING THAT
BROUGHT THE USA TO THE
BRINK OF DEFAULT ON ITS
DEBTS IS TEMPORARILY
QUIET MANY ARE
CONCERNED THAT THIS IS
JUST THE LULL BEFORE
THE NEXT STORM.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

6. TO THE EXTENT THAT
POLITICAL GAMESMANSHIP
DRIVES THE USD
FUNDAMENTAL ANALYSIS
OF FOREX PAIRS IS
DIFFICULT TO IMPOSSIBLE
WHEN HALF OF THE TRADE
IS THE USD. AS MONEY
MOVES TO OTHER
CURRENCIES IT DRIVES
THE VALUE OF THE USD
DOWN.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

7. AND, MANY EMERGING
MARKETS ARE RAISING
INTEREST RATES IN ORDER
TO ATTRACT CAPITAL.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

8. TRADERS MOVE CAPITAL
OUT OF LOW INTEREST
RATE MARKETS INTO HIGH
INTEREST RATE ONES.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

9. THIS AMOUNTS TO A CARRY
TRADE AND AN EMERGING
MARKET CARRY TRADE
WEAKENS THE USD.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

10. US INTEREST RATES WILL
STAY DOWN UNTIL THE
ECONOMY STARTS TO
MEND MORE THOROUGHLY
AND THE FED CUTS BACKS
ON ITS QUANTITATIVE
EASING PROGRAM WHICH
IN TURN HOLDS INTEREST
RATES DOWN.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

11. THE LONG TERM
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

12. EVERY TRADER HAS ONE
EYE ON THE US FED TO SEE
WHEN THEY REDUCE THE
$85 BILLION A MONTH
STIMULUS PROGRAM AS
DOING SO WILL DRIVE UP
US TREASURY INTEREST
RATES AND THE VALUE OF
THE US DOLLAR.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

13. HOWEVER, THE RECURRING
ISSUE OF POSSIBLE
SOVEREIGN DEBT DEFAULT
IS A SERIOUS ONE FOR THE
USA.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

14. IT COULD END UP LIKE THE
STORY OF THE BOY WHO
CRIES WOLF TOO MANY
TIMES.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

15. EVENTUALLY PEOPLE WILL
START IGNORING THE USA
AND BANKING THEIR
RESERVES IN OTHER
CURRENCIES.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

16. WHEN NO ONE SHOWS UP
TO PURCHASE US DEBT
THE RATES WILL GO UP
UNLESS THE COUNTRY
LEARNS TO LIVE WITHIN ITS
MEANS.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

17. THE LONG TERM ISSUE IS
STILL THE HUGE US DEBT
BURDEN.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

18. ALTHOUGH CURRENCY
TRADERS TODAY ARE
FOCUSING ON HIGHER
INTEREST RATES IN
OFFSHORE ECONOMIES
THE LONGER TERM FOCUS
MAY BE AWAY FROM THE
USD.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

19. WHILE AN EMERGING
MARKET CARRY TRADE
WEAKENS THE USD TODAY
NOT DEALING WITH THE
DEBT BURDEN AND SHORT
SIGHTED POLITICS IS
LIKELY TO DAMAGE THE
USD MORE SEVERELY IN
THE LONG TERM.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

20. IF THAT IS THE CASE THOSE
USD ASSETS THAT ARE
CONVERTED TO
REALES, COLONES, VARIOU
S
PESOS, RUBLES, YUAN, RA
ND, AND RUPEES MAY
NEVER COME BACK.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

21. TRADING TODAY AS AN
EMERGING MARKET CARRY
TRADE WEAKENS THE USD
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

22. THE COUNTRIES WHERE
THIS TACTIC WILL WORK
WILL BE THOSE WHOSE
CURRENCIES SUFFERED
MOST IN MIDSUMMER SELLOFFS.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

23. THESE INCLUDE THE INDIAN
RUPEE, THE INDONESIAN
RUPIAH, THE SOUTH
AFRICAN RAND, THE
BRAZILIAN REAL, AND THE
TURKISH LIRA.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

24. AS ALWAYS TIMING IS
IMPORTANT AND FACTORS
CAN CHANGE.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

25. KEEP AN EYE ON CHINA AS
THEIR DEBT STRUCTURE IS
STILL SUSPECT AND THEIR
EXPORTS ARE FALLING AS
EUROPE AND NORTH
AMERICA ARE NOT COMING
BACK ON LINE AS THE
PATRONS OF CHEAP
PRODUCTS FROM CHINA
THAT THEY ONCE WERE.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

26. AND WHEN THE FED ACTS
TO EASE QUANTITATIVE
EASING AND INCREASED
BOND YIELD DRIVE THE
DOLLAR HIGHER THE
SHORT TERM SITUATION
WILL CHANGE.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd

27. AS ALWAYS DO YOUR OWN
HOMEWORK AND DO NOT
BE AFRAID TO SIT OUT A
TRADE THAT YOU DO NOT
UNDERSTAND.
http://www.the
forexnittygritty.
com/forex/em
erging-marketcarr y -tradeweakens-usd