Has Carry Carried the USD?

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20210906 COTD x Has Carry Carried the USD - chart website

Source: Unigestion, Bloomberg, as of 31 August 2021

The positive carry induced from holding long USD positions against a majority of G10 currencies starting in 2018 was an important supporting force driving the USD higher. As we can see today, the average relative dollar carry across G10 FX is now close to zero from peaks previously reached in 2019. With many emerging market central banks having started their hiking cycle this year to fight rising inflation, the cost of holding USD longs compared to the beginning of the year is even more striking. The carry element has therefore not been a positive driver for the USD this year and will have acted more as a headwind.


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