CAD/CHF and Oil: Carry trade and Interest Rate Differential
Giving the weekly oil rally, I believe CAD will go higher relative to a neutral CHF stance in the global markets.
What's more, with Swiss negative rates and CAD positive rates, going long this pair would be worth holding several months just because of the interest rate differential. Many times rates are in the "wrong direction" of the trend in which you wish to buy, but in the case, we are presented with a rare opportunity to make money going long on interest rate differential and the price appreciation of this pair.
RISK:
(1) This pair does not move in our favor. In this case the 2% interest rate differential would not be enough in the short-term to mid-term to offset losses.
(2) SNB announcements out of our favor
What's more, with Swiss negative rates and CAD positive rates, going long this pair would be worth holding several months just because of the interest rate differential. Many times rates are in the "wrong direction" of the trend in which you wish to buy, but in the case, we are presented with a rare opportunity to make money going long on interest rate differential and the price appreciation of this pair.
RISK:
(1) This pair does not move in our favor. In this case the 2% interest rate differential would not be enough in the short-term to mid-term to offset losses.
(2) SNB announcements out of our favor
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Bình luận:
Moved stop to break-even.
Capturing the swings of the stock market & currency market. It's a dirty job and equity/currency traders must do it.
