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fxAug 10, 2026, 6:10 PM

LatAm Carry Window Opens After Dovish Fed Turn, BNY Says

BNY strategists see an improved window for LatAm carry trades after dovish Fed signals and weak US labor data, but warn of broken commodity links and inflation risks.

BNY strategists Geoff Yu and David Tam flag improving conditions for Latin American carry trades. A more dovish Federal Reserve and softer US labor data have helped reopen the window for yield-seeking positions.

The strategists caution, however, that the trade is not without risk. Broken correlations between LatAm currencies and commodity prices, alongside lingering inflation concerns, limit how far the rally can run.

While the macro backdrop has shifted in favour of carry, the team stresses that investors need to be selective and mindful of domestic policy risks.

Source: FXStreet Forex News