Commentary - As investors slowly add capital back into their 'risky' long carry trades, caution remains the tentative tone of the market. The high rate differential in the yen crosses clearly received traders immediate attention in the aftermath of substantial sell offs; but those moves have tapered off as fear once again blooms out of the quiet. Now, as traders look for the safer places to add to their carry portfolios, there is a clear interest in the pairs with somewhat smaller yield differentials as they are deemed better able to hold off momentum in another bout of unwinding with most of the market focusing its attention on the yen first. Technicals seem to hold something else in store for EURAUD though. Trendline support has come up to meet the 50% fib of the 7/26 to 8/17 swing high. A break of the short-term, downward sloping channel or rising trendline seems inevitable; and we remain flat on the pair until the break initiates the next leg.
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