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March 10, 2008

The sell off in the markets today is only encouraging those carry trades downward just as I'd said.

Man...the Dow hitting 11.750...oil hitting the $108 area. Wow!

This is all a recipe that is a disaster for the carry trades. EUR/JPY and GBP/JPY has headed lower and is poised to break a very crucial support. When this happens, "look out below" once again.

Check out the EUR/JPY 4 hour chart below. Click on the chart below to enlarge it.

Eur_jpy_4_hour

GBP/JPY doesn't look any better. It's ready to head south real fast too. Click on the chart below to enlarge it.

Gbp_jpy_4_hour

So with Trichet giving "warning signals" with the high euro exchange rate...that's going to encourage the EUR/JPY rate downward.

The shakiness in the financial markets right now is boosting the yen and Swiss franc. This will end up bringing most carry trades down to their knees in the upcoming weeks/months.

So "look out below"! It's going to get ugly and the euro and pound will suffer at the feet of the yen and the Swiss franc.

Posted at 04:04 PM in Carry Trade |

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