Welcome to the Artificial Intelligence Outlook for Forex trading. https://www.youtube.com/watch?v=2yhMCXZp_AA VIDEO TRANSCRIPT Okay, hello everyone, and welcome back. My name is Greg Firman, and this is the Vantage Point AI ...
- The U.S. dollar steadied Friday, set to end a volatile week with small gains as traders digested the implications of a new Trump presidency as well as benign...
The unraveling yen carry trade was one reason the tech sector saw a sell-off earlier in the week. Questions began to arise around how much of an impact this will have and if things will get better, especially as worries about interest rates continue to linger. TD Securities' global head of FX and EM strategy, Mark McCormick, joined Catalysts to provide insight into the carry trade and its effect on the tech sector. McCormick believes the current situation in Japan is "challenging for tech largely because tech is like premised, particularly on easy money and easy monetary conditions and low interest rates." He argues for stocks like Nvidia (NVDA) it could be a positive because "the yen [is] basically rallying because there's a repatriation of capital coming home. And that's causing basically a trigger of interest rates to move higher, particularly real rates. That could also be a catalyst to kind of provide the same outcome and sees earnings start to decline as well." For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Nicholas Jacobino
On today's episode of Catalysts, Co-hosts Seana Smith and Madison Mills dig into this week's market volatility, from jobless claims data to the yen carry trade unwinding. The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) are reversing some of the gains made in Thursday's trading session as volatility rocks the market. Edward Jones senior investment strategist Mona Mahajan explains, "Markets have certainly calmed much more meaningfully over the last couple of days than we saw Monday and Tuesday of this week even... We've seen this week alone the jobless claim figures that came in below expectations provided a little comfort to the market that is really looking for direction on a couple of things. One, is the US labor market headed towards some sort of meaningful collapse or downside, and two, is the broader economy headed towards a downturn as well? And I think for us, both of the answers to both of those questions are no." The tech sector has been particularly rocked by market volatility this week, yet Goldman Sachs Asset Management fundamental equity managing director Luke Barrs still sees opportunity. "Selectively, there's great opportunity across the broad market, but specifically in tech as well. There are some transformational themes that are coming through that are driving earnings," he explains. He adds, "When we come to technology, what is very apparent is not just the macroeconomic picture, but also the fact that people want to see... evidence that that gen AI trade is actually driving positive outcomes." A global market sell-off occurred on Monday after the Bank of Japan hiked interest rates, which unwinded the yen carry trade (JPY=X). TD Securities global head of FX and EM strategy Mark McCormick believes that the carry trade unwind isn't over, explaining, "The structural nature of the carry trade is that for pretty much around the last decade, Japanese investors have put their money, mostly pension funds, which accounts for about 80% of GDP in other markets. So the assets that they're tracking in other markets are actually a big form of the carry trade." Some retail investors used the market sell-off as a buying opportunity. IG Group North America CEO JJ Kinahan notes, "Every crisis... we've had over the last five years, where retail traders tend to start are two technology names, Apple (AAPL) and Microsoft (MSFT)." He adds that "Apple and Microsoft are going to be names that retail trades significantly anyways, but made up a larger percentage of trading on Monday and Tuesday, for sure, as people were looking for places to go buy." For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Melanie Riehl
The US Dollar continues to see a lot of volatility against the Japanese yen, as the markets have started to try to price in the idea of the economy slowing down.
The yen carry trade, where US investors borrow Japanese yen, due to its low interest rate environment, to purchase US monetary assets for a profit, has backfired on some investors as the Bank of Japan began to increase interest rates. A sell-off resulted, in part, due to this phenomenon having an impact on the US market. Yahoo Finance markets and data editor Jared Blikre joins Catalysts to break down the Japanese yen carry trade and its impact on the US stock market. For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Nicholas Jacobino
One of the more popular trades in recent memory was the yen carry trade (JPY=X), which backfired after the Bank of Japan started a rate hiking cycle. While it resulted in a sell-off on Monday, will traders continue this strategy? TD Securities global head of FX and EM strategy Mark McCormick joins Catalysts to give insight into the carry trade and movements in global markets Right out of the gate, McCormick affirms: "I do not think the carry trade unwind is over. I think we have a long way to go. I think you need to think about whether it's kind of tactical and the structural nature of it The structural nature of the carry trade is tha,t for pretty much around the last decade, Japanese investors have put their money, mostly pension funds, which accounts for about 80% of GDP in other markets. So the assets that they're tracking in other markets are actually a big form of the carry trade." When asked whether the Chinese yuan could be the next carry trade to unwind, McCormick responds: "I think you need to kind of disentangle the correlation of the yuan versus the yen. They have re-correlated right now. They're being driven by similar factors. So the Chinese yuan is a good funding for a carry trade. And again, if you think about what drives a carry trade in markets, why people love it. It's very simple. It's what you need is rate divergence, so one country needs higher rates, another country needs lower rates. And you need low volatility." For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Nicholas Jacobino
London and Europe have clawed back losses from Monday’s plunge.
The US Dollar has been somewhat soft in the early hours on Friday, as it looks like the market continues to run towards the Japanese yen. This safety trade seems to be picking up steam, but at this point in time, it is likely that we will continue to see
The Aussie dollar initially fell hard for the week, only to turn around and show signs of life. This is a market that will continue to follow the risk appetite of traders, the global growth situation, and of course the Asian economic realities.