It’s only Tuesday, but what a week it’s already been! 😲
Yesterday, investors, traders and investors around the world experienced a rollercoaster ride as global stock markets plunged, but today they have partially recovered.
An important factor contributing to these disturbances was the solution of thepregnancy tradeIt is a popular but risky investment strategy.
Carry trade involves borrowing money in a currency with low interest rates, such as Japanese Yenand then invest the borrowed capital in assets with potentially higher returns, such as stocks or bonds.
When these investments are successful, the returns on them exceed the interest paid on the loan, resulting in a profit. However, this strategy depends on stable market conditions.
Recently, concerns about a potential recession in the United States and “overvalued” technology stocks have sparked a Sell wave.
This forced many investors involved in the trading to sell their holdings to repay their loans, which exacerbated the market’s decline.
The sudden demand for US dollars to cover these yen-denominated loans has put additional downward pressure on global stock prices and major currency pairs.
Although the markets were able to recover some of their losses today, this episode highlights the risks inherent in carry trades.
Its reliance on cheap borrowing and favorable market conditions makes it vulnerable to sudden reversals when risk sentiment deteriorates.
Besides the carry trade, other factors contributed to the market turmoil. Fears of a slowing US economy, along with concerns about overvalued stocks in big tech and AI/semiconductor companies, fueled the sell-off.
The role of carry trades in exacerbating volatility across different assets, from forex to stocks to cryptocurrencies, serves as a reminder Interconnectedness of global financial markets.
As for the US dollar, after the crazy price action caused by the carry trade pullback, it is showing signs of Stability Against the Japanese yen.
But while the USD/JPY pair has risen slightly, things are still a bit rough. UncertainWe have to wait and see what happens next.
some Analysts estimate This is just about Half load trade The matter has been settled, indicating that more market turmoil is possible!
Forex Market Drivers
Let’s review the price action in Forex today.
Which currency pairs made the biggest gains today?
australian dollar/japanese yen He was the leader of the group, and got 0.48% or 45 points.
As explained by us Foreign exchange market drivers Page, the top 5 gainers had very small gains.
look at me AUD/JPY Trend Following RatingIt has shown very amazing results. bearish evaluation.
But the AUD/JPY Overbought/Oversold Rating He appears “Oversold” evaluation.
Which currency pairs lost the most today?
GBP/AUD He was the biggest loser, as he fell. 0.95% or 187 points.
currency strength
What is the overall strength or weakness of the individual major currencies today?
Based on currency strength meter On MarketMilk™, JPY It was the strongest currency, while GBP It was the weakest currency.
If we dig a little deeper and look at how the major currency pairs work Moved in the last 24 hoursWe can see USD/JPY Sharp rise at the Asian open, sell-off, then attempt to rally several times throughout the day.
Short term currency trends
When it comes to Short term trend strengththe Japanese Yen (JPY) and the Swiss franc (Swiss Franc) shows upward strength.
GBP Shows the most downward force.
Heat map of currencies
If we take a look at Heat map of currenciesWe can see the Swiss Franc and Japanese Yen breaking their highs of the previous week and month.
currency fluctuations
What is the most volatile currency today?
Based on our website Currency Volatility MeterIt’s the Japanese Yen (JPY).
look at me History of currency fluctuations Over the past 24 hours, you can see how volatile the Japanese Yen has been during the three Forex trading sessions!
What is the most volatile currency pair today?
Since the Japanese Yen was the most volatile currency, it had to be a Japanese Yen pair. But which pair?
British pound/Japanese yen. I moved 2.35% or 429 points!