📝Carry Trades Benefited On Subdued Cross-Market Volatility: ING

As we have been saying recently, January and February are typically good months for the dollar, and our call is for patience rather than jumping on the next leg of the dollar bar trend just yet. But the overall environment tends to support more range-bound dollar trading than any aggressive reversal higher in the dollar just yet. On the horizon this week will be the December US CPI data and also a host of US bank earnings released on Friday. We doubt US data will move markets today, but as usual, we will be interested in what the NFIB small business survey has to say about activity, employment, and pricing intentions. It is hard to see DXY trading outside of Friday's 101.90 to 103.10 range today – a range that could well define the entire week.

With cross-market volatility remaining fairly subdued it is clear that carry trade strategies will have some enduring appeal. The bigger question may be in which currency to fund them.

-ING