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Mar 19 - 02:55 PM

G10: The Policy Divergence Is Here To Stay; What's The Trade? - Credit Agricole

By eFXdata  —  Mar 19 - 12:00 PM

Credit Agricole CIB Research sees a scope for the recent policy divergence among G10 central banks to support carry trade strategy over the coming months.

"As vaccination rates grow, large swathes of the global economy will be freed from the shackles of lockdowns and should start returning to normal before long...The diverging macroeconomic outlook has resulted in different response by G10 central banks to the recent selloff in global fixed income markets. While the Fed, BoC, Norges Bank, RBA and the BoE have welcomed the latest rally in bond yields, the ECB and the BoJ have pushed back against the tightening of global financial conditions," CSCIB notes. 

"We believe that the policy divergence is here to stay and could fuel demand for FX carry trades where investors buy the USD, CAD, NOK, AUD, NZD and to a lesser degree the GBP and sell the JPY, the CHF and the EUR," CACIB adds. 

Crédit Agricole Research/Market Commentary


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