With Chinese reval story on the headlines, teh carry idea may get pushed aside as we get broad anti-dollar selling in the yen as well as Chinese decide to further loosen the peg.

GBPUSD - The ratio of long to short positions in the GBPUSD stands at -2.63 as nearly 72% of traders are short. Yesterday, the ratio was at -3.12 as 76% of open positions were short. In detail, long positions are 4.2% lower than yesterday and 22.3% weaker since last week. Short positions are 19.0% lower than yesterday and 7.8% stronger since last week. Open interest is 15.4% weaker than yesterday and 10.5% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.


The ratio of long to short positions in the USDJPY stands at 1.78 as nearly 64% of traders are long. Yesterday, the ratio was at 1.72 as 63% of open positions were long. In detail, long positions are 0.3% lower than yesterday and 13.0% stronger since last week. Short positions are 3.7% lower than yesterday and 18.3% weaker since last week. Open interest is 1.6% weaker than yesterday and 9.1% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

Source: FXCM Dealing Desk

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It is one of the pair which is ill of carry trades ..Where is the buttom here?

Carry trades were hit pretty hard once again once the Asian markets opened up, with indexes like the Shanghai down 4.04%, the Hang Seng down 4.46%, and the Nikkei down 2.48%. This doesn't bode well for the Dow, which has already broken through major support levels. If we see US shares take a hit in the morning and push the Dow below 12,900, the August lows near 12,500 will not be out of reach.

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Some traders view 157.00 as key support which is still 450 points away.

Carry Trade Unwinds on speculation major banks could announce more write downs tied to subprime home loans

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The recent surge in the VIX likewise does little to boost the carry trade's chances. Given a strongly negative correlation between the VIX and risk-sensitive carry trade pairs, we may see further carry trade downside in the days ahead.

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We're seeing a bounce today. I made a killing on AUD/JPY, GBP/JPY, and EUR/TRY. But I agree with you, this is a temporary bounce.

Yen Carry trade Positioning

The ratio of long to short positions in the USDJPY stands at 1.84 as nearly 65% of traders are long. Yesterday, the ratio was at 2.10 as 68% of open positions were long. In detail, long positions are 5.0% lower than yesterday and 25.2% stronger since last week. Short positions are 8.2% higher than yesterday and 16.2% weaker since last week. Open interest is 0.7% weaker than yesterday and 8.6% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

Source: FXCM Execution Desk

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The sharp pullback in the VIX confirms what we already know: lower volatility has allowed carry trades to regain some traction with the yen pairs and US equities up strongly.

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The VIX (and broader risk aversion) are trending lower through recent trade, but it's clear that a very late tumble in the DJIA leaves risks to the downside for the carry trade through upcoming tokyo trade.

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Risks continue to be weighed to the downside for the carry trade, as a sharp decline in US stock indices may spill into subsequent Tokyo trading.

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I haven't done one of these studies in a little while, but I thought it pretty significant to note that the more recent carry trade drawdown has seen as much as 8.9 percent off of July peaks. Things don't look very good for the high-yielders given overwhelmingly bearish momentum.

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Carry Trade Positioning

GBPUSD - The ratio of long to short positions in the GBPUSD stands at -1.37 as nearly 58% of traders are short. Yesterday, the ratio was at -1.28 as 56% of open positions were short. In detail, long positions are 6.1% higher than yesterday and 38.0% stronger since last week. Short positions are 12.9% higher than yesterday and 21.3% weaker since last week. Open interest is 9.9% stronger than yesterday and 3.6% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.

USDJPY - The ratio of long to short positions in the USDJPY stands at 1.69 as nearly 63% of traders are long. Yesterday, the ratio was at 1.51 as 60% of open positions were long. In detail, long positions are 11.6% higher than yesterday and 4.8% weaker since last week. Short positions are 0.6% lower than yesterday and 2.4% weaker since last week. Open interest is 6.7% stronger than yesterday and 13.9% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

USDCHF - The ratio of long to short positions in the USDCHF stands at 1.61 as nearly 62% of traders are long. Yesterday, the ratio was at 1.62 as 62% of open positions were long. In detail, long positions are 7.6% higher than yesterday and 5.1% weaker since last week. Short positions are 8.5% higher than yesterday and 30.8% stronger since last week. Open interest is 7.9% stronger than yesterday and 14.2% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.


AUDUSD - The ratio of long to short positions in the AUDUSD stands at 1.23 as nearly 55% of traders are long. Yesterday, the ratio was at 1.20 as 55% of open positions were long. In detail, long positions are 6.2% higher than yesterday and 22.1% stronger since last week. Short positions are 3.9% higher than yesterday and 11.3% weaker since last week. Open interest is 5.2% stronger than yesterday and 26.1% above its monthly average. The SSI is a contrarian indicator and signals more AUDUSD losses.

NZDUSD - The ratio of long to short positions in the NZDUSD stands at 1.50 as nearly 60% of traders are long. Yesterday, the ratio was at 1.26 as 56% of open positions were long. In detail, long positions are 22.4% higher than yesterday and 9.5% stronger since last week. Short positions are 2.8% higher than yesterday and 18.7% weaker since last week. Open interest is 13.8% stronger than yesterday and 2.9% above its monthly average. The SSI is a contrarian indicator and signals more NZDUSD losses.

Source: FXCM Execution Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/special...140917987.html

The ratio of long to short positions in the USDJPY stands at 1.74 as nearly 64% of traders are long. Yesterday, the ratio was at 1.56 as 61% of open positions were long. In detail, long positions are 10.7% higher than yesterday and 1.2% weaker since last week. Short positions are 0.8% lower than yesterday and 5.8% weaker since last week. Open interest is 6.2% stronger than yesterday and 16.5% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

Source: FXCM Execution Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/special...140917987.html