Emerging Markets Could Benefit from ECB Decision

With European interest rates at record lows, the euro will likely become a popular carry trade, with investors funding investments in higher yielding assets including emerging market currencies.

“What we’re seeing is liquidity is set to ramp up, volatility is still low and as a result carry structures are still in place,” said Weston.

“Now we say, what’s our funding currency? It’s clearly the euro, no other currency. And then we ask where can I get yield? And you want to be long emerging markets, the Australian dollar, and high yielding Latin American currencies,” he said.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza