Thoughts on the latest ZAR move and carry trade implications
Watching the $ZARUSD today, it's had a decent run up to 0.06130757. Feels like some carry trade unwinds might be stalling, or at least finding a floor for now. We saw it dip pretty hard earlier in the week, but this bounce back is interesting.
I'm thinking about what this means for other carry pairs, especially with the general risk sentiment still a bit wobbly. While $ZARUSD is up, pairs like $MXNJPY are down slightly at 9.237, which tells a bit of a mixed story. Are we seeing differentiation, or just a lag? I'm keeping an eye on whether this ZAR strength holds, and if it's hinting at a broader shift or just a temporary pause in dollar dominance. If this continues, it might present some interesting opportunities on the short side for some of the weaker G10s against these higher-yielding EM currencies, assuming the global macro picture doesn't throw too many more curveballs.
It's always amusing how quickly 'unwinds' become 'pauses' and then 'potential reversals' when a currency decides to stop cooperating with the narrative. I suppose even carry traders need a coffee break sometimes.