Today’s aggregated G8 FX indices chart leaves no doubt, the torrid market conditions out there, with the S&P 500 shaving over 10% from its all time high, suggests the hold of carry trades has become way too risky. The immediate ramifications of this aggressive unwind is to witness funding currencies the likes of the Euro, the Yen and the Franc flying in style. It’s simply not the time to keep carry-trade exposure when we’ve had the worst week in US equities since the GFC and the VIX at a 2-year high. One can see in the chart below the considerable gap that has opened up between ‘the funding currencies’ and ‘the high yielding complex’ with the Canadian Dollar by a country mile the most punished. I salute you with huge respect if you’ve been able to capitalize it through EUR/CAD longs. What a move! When looking at the Aussie and Kiwi, it’s the same old story, with sellers firmly in control. Make sure you visit the ‘insights into charts’ section for an opportunity to explore the smart money footprint in the Oceanic currencies as short-inventory keeps being built. In this environment of funding currencies thriving, USD longs were too schooled not to marry to a single direction, in this case longs, despite the 2020 bull trend is still in place. Lastly, the Pound remains unloved as the political brinkmanship by UK PM Johnson with the EU ratchets up.