All we’ve heard in recent weeks is all the selling of commodities currencies and buying of JPY is the unwinding of the carry trade. With hedge funds in deep distress it seemed odd that they would still be clinging to these losing strategies after such a brutal fall. Today it appears as though they weren’t. They were building big short positions in these trades. Once again, they are scrambling to get out of positions that have suddenly turned toxic.
Funds have been huge buyers of AUD, CAD, EUR and more moderate sellers of JPY thus far. Emerging market currencies are also on the mend as rescue packages are worked out with multilateral organizations like the IMF and World Bank.
