Carry traders move to Swiss Franc to fund their trades [Video]

Ipek Ozkardeskaya Swissquote Bank Ltd

Risk appetite got a hit yesterday as an army of Federal Reserve (Fed) speakers sounded cautious about the timing of the first rate cut and as the barrel of Brent spiked past the $90pb level on rising tensions between Iran and Israel after Israel bombed the Iranian embassy in Damascus earlier this week.

The latest spike in oil prices will be reflected in the upcoming inflation reads and may derail the Fed from its ‘three rate cuts’ plan for this year.

Today, all eyes are on the US jobs data, that should distinguish between those expecting that the Fed will cut interest rates three times this year and those who bet that the Fed will barely cut the rates with strong growth and rising inflation. Another higher-than-expected NFP and hotter-than-expected wages growth could lead to a further pullback in dovish Fed expectations, weigh on stock and bond valuations and boost the US dollar.

Elsewhere, the European Central Bank (ECB) minutes hint at upcoming rate cut, while falling Swiss inflation backs further Swiss National Bank (SNB) easing, convincing carry traders to move from the yen to Swiss francs for funding their trades.

Author

Ipek Ozkardeskaya

Swissquote Bank Ltd

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

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