Emerging-Market Traders Shift Funding to Euro and Aussie Dollar as US Dollar Rebounds
Updated
Updated · Bloomberg · Jul 5
Emerging-Market Traders Shift Funding to Euro and Aussie Dollar as US Dollar Rebounds
3 articles · Updated · Bloomberg · Jul 5
Summary
Invesco and AllianceBernstein are relying less on the US dollar to fund higher-yielding emerging-market positions, reflecting a broader shift toward the euro and Australian dollar.
The change follows the dollar’s renewed strength, which has made it a less attractive funding currency for carry trades in developing-world assets.
Morgan Stanley told clients to express bullish emerging-market views against a wider basket including the dollar, euro and yen, rather than the dollar alone.
Citigroup recently recommended a trade betting Brazil’s real will strengthen against both the euro and the Australian dollar, underscoring the move toward more diversified funding pairs.