The Brazilian real is in huge demand, certainly helped by the huge yields on offer and with the carry trade working well anything with a high yield is bid

Chris Weston

Pepperstone

The Brazilian real is in huge demand, certainly helped by the huge yields on offer and with the carry trade working well anything with a high yield is bid. There has been a strong move in the pair after hitting a high of 2.4694 on January 29 and is now testing the uptrend from the 2011 low. When you see the JP Morgan FX volatility index at the lowest level since late 2012 the conditions are ripe for carry appreciation. Sell the break. While the real is flying, it's worth taking a look at the MXN (Mexican peso). Another currency with a strong yield it also has the advantage of liquidity, neutral positioning and has seen better data of late. There is an IPO process about to ramp up as well, which could see better capital inflows. If the carry trade continues in earnest, then the MXN is worth a look.


2 topics

Chris Weston
Head of Research
Pepperstone

Highly accomplished financial markets professional, with experience at a number of top-tier global institutions on both the buy and sell-side. A natural communicator with a strong ability to analyse macro-economic trends, capital flows and market...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.