It’s been an interesting start to what promises to be a interesting week in the forex market. The biggest story of Monday’s trade thus far has been the continued strength of the dollar despite disappointing data in the world’s largest economy.
One of the biggest casualties of the ongoing global low interest rate environment has been the carry trade, where traders sell a currency with a low interest rate and use the proceeds to buy a currency with a high interest rate. As we know, “high” interest yields have been hard to come by of late, limiting the appeal of carry trades the world over.
Throughout November, the New Zealand dollar (NZD) has been able to do something that very few other currencies have been able to do, gain value against USD. Here are some reasons outside of simple USD strength that it might not continue.