Euro-funded carry trades look to be clearing out
Quite a reversal in EUR/USD
The euro and yen are catching big bids in the latest FX moves.
EUR/USD is now narrowly higher on the day at 1.1813.
This to me looks like a classic unwind of carry trades. The euro and yen are the funders of choice at the moment because there is no monetary tightening on the horizon. With the ugliness we are seeing in markets at the moment, those trades are clearing out.
What's troublesome is that those trades are often in stronger hands so the move indicates some real fear.