Tuesday, August 25, 2015

8/25/15 The reason the dollar went down during the melt down

I searched for reasons why USD went down during the meltdown.  The best I can gather is it was due to unwinding of carry trades funded in Yen and Euros.

Another reason was OPEC nations selling treasuries to cover their bills what with oil revenue being down so much.  Another is that expectations of a FRB rate increase have decreased.

There is a huge carry trade funded in USD which if it unwinds will shoot the dollar to the moon.  (Funding is raised by shorting a currency and unwinding means buying it back).

That will be interesting.

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