- Advertisement -
- Advertisement -

Related

USD – The new carry trade?

Latest Report

- Advertisement -

Stockholm (HedgeNordic) –  The USDSEK has been in the range between 8:01 and 8.88 since April this year and found a new bottom at 8:09 in the middle of October. The price has steadily risen and is now in the upper region of the range. The Riksbank also embarked on its own share of the global “currency war” through new stimulus packages and would preferably like to see the dollar strengthened further against the Swedish krona, which has also been the impact of the announced support purchases at home and an expected interest rate hike from the Federal Reserve on the 16th December.

The economic data published in the US has been strong since the Fed’s latest meeting and Janet Yellen has indicated that a potential hike is in the pipeline. The market assesses the probability at around 70% and Friday’s US Non-farm payrolls at 211k, above the 201k forecast has fuelled the expectations of a rise even further. If the United States raises the rates as the first country in the G8, it will signal a tightening of monetary policy, something that has not occurred since 2006.

USDSEK

Given that the stock market’s surge in recent years has largely been due to very low interest rates and “cheap money” through asset purchases, a tightening will most likely lead to a significantly weakened risk appetite in the market which might trigger a bearish sentiment in the market. In a scenario where a potential fall in the stock market leads to an increasingly weak risk appetite, capital flows into the US dollar as a safe haven currency could contribute to the USDSEK breaking the range and take it up to 9.00 for the first time since March 2009. This brings up the prospects that the USD will be the new “carry trade” whereby investors sell a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. This together with the broad technical outlook favors further USD gains well into 2016.

Picture: (c) isak55—shutterstock.com

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Ruben Wandemar
Ruben Wandemar
Ruben Wandemar has been working in the financial industry since 2007 and has specialized on client relations and marketing. Having worked with retail clients in one of Sweden’s first brokerage firms, he joined a Swedish CTA / family office where he was responsible for sales and operations in the Nordic region. Today, Ruben works as Head of Business Development for Scandinavian Capital Markets SCM based in Stockholm, Sweden.

Latest Articles

Sissener and Sweden’s Family Office Market: A Natural Match

Both observation and scattered market data suggest that in Sweden, hedge fund investors are predominantly family offices, foundations, and private banks rather than large...

Hedge Funds Pay Off for the State Pension Fund of Finland

Finland’s largest institutional investors remain committed allocators to hedge funds, yet the State Pension Fund of Finland’s (VER) hedge fund allocation stood out as...

Carl Berg to Lead Niam’s Capital Formation Efforts in Sweden

Private markets firm Niam Group has strengthened its Capital Formation and Investor Relations team with the appointment of Carl Berg as Capital Formation Director...

Statistical Outlier Year for HCP Black

When HedgeNordic spoke with Tommi Kemppainen in early 2019, the CEO of Helsinki Capital Partners outlined a defensive positioning for the multi-strategy fund HCP...

Nordea Adds Systematic Fixed Income Expertise

Nordea Asset Management (NAM) has strengthened its data-driven investment capabilities with the addition of two London-based professionals, Lucette Yvernault and Marton Huebler, marking the...

From Short-Term Opportunity to Long-Term Outperformance

Borea Utbytte, a banking sector-focused equity fund under Norwegian boutique Borea Asset Management, celebrated its five-year anniversary at the turn of September to October....

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.