The carry trade looks good again

Gaining nearly 200 pips, the pair to trade today was the EUR/JPY. It marked a reversal in the unwinding carry trade of the past week. A few factors are responsible. This weekend’s voting results showed the prime minister’s party lost a majority in the upper house election for Japan. Also, interest rate futures have shifted to expectations toward a pause during the central bank’s August meeting. Weaker economic data is responsible for this. And if world financial markets keep with less volatility, this trend may continue.

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