I see lots of referenced to this term but I cannot understand what this is. I notice that Wikipedia refers to the size of the forex market to be split between the carry and spot. I think that I demo trade in the spot market. the term 'carry' perhaps eludes me though. I see references to interest rate differentials earn on the various currencies.
So is the 'carry trade unwind' that I'm looking at on the AUDUSD a reference to people(institutions) using complex hedging strategies to earn what I know as swap? If so, why would someone unwind that position. Has the interest rate differentials been affected by the Australian Reserve Bank interest rate increases?
So is the 'carry trade unwind' that I'm looking at on the AUDUSD a reference to people(institutions) using complex hedging strategies to earn what I know as swap? If so, why would someone unwind that position. Has the interest rate differentials been affected by the Australian Reserve Bank interest rate increases?