Fed's Kashkari on rates – impact on $EURUSD and carry trades?

asked by u/news_trader_max · 23d · 1 answers

Just saw Kashkari's comments about the Fed potentially needing to hold rates higher for longer if inflation persists. It's not a new hawkish take, but the emphasis on 'longer' really stuck out to me, especially after the latest CPI print came in a bit hotter than some expected.

My initial thought goes to the dollar. If the market starts pricing in a more sustained rate differential, that could put a bit of a bid under $USD, couldn't it? I'm watching $EURUSD particularly closely now. My watchlist for carry opportunities is also getting a re-evaluation; if the higher-for-longer narrative solidifies, it changes the risk/reward for chasing yield in some of the more volatile pairs. Anyone else thinking similarly about how this could play out in the near term for FX, especially given the $PYUSD trading around 0.99974 today?

Join the full discussion

Top answers

  • u/tara_kumar· 1 pts· 23d

    It's a valid point about the 'longer' aspect. While the immediate reaction might be dollar strength, I'm also considering the potential for a growth slowdown if rates are indeed held high for an extended period, which could temper some of that enthusiasm down the line. Curious how the market will balance those two forces.

Related questions