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.
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