LatAm FX Carry Trade Faces Fed Test as Terms of Trade Improve: BNY
Latin American currencies could benefit from stronger commodity exports and attractive real rates, but carry trade appeal depends on the Federal Reserve's next moves, according to BNY's Geoff Yu.
Geoff Yu at BNY Mellon notes that Latin American assets are once again benefiting from better terms of trade driven by strength in energy and soft commodity exports. The region’s high real interest rates provide a solid anchor for currencies, attracting carry trade flows.
However, the appeal of those carry positions is being tested by the Federal Reserve's monetary policy outlook, which could influence global risk appetite and the dollar’s direction.
Source: FXStreet Forex News