For the last 15 years, the lowest cost currency of choice to
short has been the Yen. However, over the last few weeks, the
dollar has become the cheapest as the 3‐month LIBOR has fallen
below the Yen.
Therefore, the fall in the $USD could be because of
short‐selling. The dollar is now within 5% of its record low,
making a leveraged trader more cautious about shorting.
With the dollar being the world’s reserve currency and the basis
of so many commodities, a short‐covering rally could develop in the
dollar as too many players don’t want it to fall too
precipitously.
Conspiracy thought for fun: Does the IMF’s sale of gold suggest
support for the dollar?
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Carry Trade Thoughts
What is the YEN telling us right now?
Posted by dsomes on 29th of Sep 2009 at 06:01 pm
For the last 15 years, the lowest cost currency of choice to short has been the Yen. However, over the last few weeks, the dollar has become the cheapest as the 3‐month LIBOR has fallen below the Yen.
Therefore, the fall in the $USD could be because of short‐selling. The dollar is now within 5% of its record low, making a leveraged trader more cautious about shorting.
With the dollar being the world’s reserve currency and the basis of so many commodities, a short‐covering rally could develop in the dollar as too many players don’t want it to fall too precipitously.
Conspiracy thought for fun: Does the IMF’s sale of gold suggest support for the dollar?