In the past, we have said that carry trades thrive when volatility is low, risk appetite is high and central banks around the world are raising interest rates.
Unfortunately with the current market environment not satisfying even one of these qualifications, carry trades have struggled. USDJPY is trading near a one month high but pairs like EURJPY, GBPJPY, GBPUSD, AUDUSD and the NZDUSD all sold off today. The Dow was both up and down over 100 points today before settling up 46 points. This type of intraday volatility is and will continue to wreck havoc for carry trades.
