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Carry Trade Opportunities in a Low Yield World

Posted 11-28-2012 at 11:52 AM by Jason Rogers [Show Appreciation] What's This?

Just yesterday the OECD slashed its global growth forecasts for 2013. "The Paris-based think-tank forecast in its twice-yearly Economic Outlook that the global economy would grow 2.9 percent this year before expanding 3.4 percent in 2013."

Since stock and bond yields are expected to be low in this environment, I have renewed interest in the carry trade. Currently the Swiss Franc/Swedish Krona pair (CHF/SEK) is trading near a key level. A short position here could target the August lows below 6.9000.

What makes this interesting is the carry trade potential. With a 100k short position earning about $2 in rollover interest per day, on 10:1 leverage that's about 7.3% per year, not including what could be made or lost on the price move of the trade itself.

You can find the rollover rates for all the currency pairs in the Dealing Rates window of the FXCM Trading Station as shown above.

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