Given that the US dollar was not able to show the same growth as other “safe haven” currencies during attacks of risk aversion, strategies for selling the dollar as part of the carry trade operations look profitable, says Steve Barrow, head of the currency strategy department at G-10 In Standard Bank. Buyers of high-yielding currencies in developed and emerging markets should have been wary of the risk of events that would have led to an increase in the dollar’s rate and would have erased the profits from the carry trade operations, but now we are asking ourselves whether investors should be so concerned about such events.
In the absence of a major risk event, such as a military conflict between the United States and North Korea, “we consider it reasonable to assume that high-yielding currencies within the framework of the carry trade will make a profit.” Low-yielding currencies, such as the euro, the yen and the Swiss franc, are likely to grow stronger than the dollar against high-yielding currencies, if the risky event suddenly comes. EUR / USD will reach 1.30 within the next 1-2 years. Draghi, the head of the ECB, probably will not be able to slow the pace of the euro’s ascent to Jackson Hole, where the symposium will be held this Friday