Risk Aversion Sends Carry Trade Unwinding

Currency trading on the FX marketThe carry trade is unwinding quite quickly today, with risk aversion sending investors hurrying toward safe havens. A great deal of concerning news is weighing on the [B]carry trade[/B].

For the most part, investors remain fixed on the drama playing out in Greece. Moody’s is warning that [B]another credit downgrade[/B] could be coming for the country if austerity measures aren’t adhered to. However, the government may find it difficult to adhere, since the public is protesting vociferously.

Another issue is the fact that [B]Britain continues to struggle[/B]. National debt is mounting, and the Bank of England acknowledges that quantitative easing may be needed again going forward.

With all of these concerns, it is little wonder that the risky carry trade is being unwound in favor of more stable positions and safe haven[B] currencies[/B].

[B]See Also[/B]

[li]Economic Data and Forex Trading[/li]Currency trading on the FX market