USD-CHF Is the Most Attractive Carry Trade: BNP Paribas’s Lynton-Brown

The video discusses the potential upside in commodity currencies, particularly within the G10 FX context, highlighting the Canadian dollar's relationship with crude oil and yield. It explores carry trades, emphasizing their performance in low volatility environments and the attractiveness of the Swiss franc. The discussion extends to global trade themes and emerging market currencies, with insights from the emerging markets team on high yielding EM performance, supported by low real yields in the US and Fed balance sheet expansion.

What is the primary focus when considering commodity currencies in the G10 FX context?

• The relationship with real estate prices

• The relationship with stock market indices

• The relationship with crude oil and yields

• The relationship with gold prices

Why is the U.S. dollar against the Swiss franc considered an attractive carry trade?

• It has a high valuation risk

• It is the cheapest currency pair

• It offers the most positive absolute carry

• It is highly volatile

What is a significant risk when being long on the dollar against low-yielding currencies?

• Valuation risk due to cheapness versus long-term equilibrium

• High inflation rates

• High transaction costs

• Lack of liquidity

What supports the performance of high-yielding emerging market currencies?

• Rising interest rates globally

• Low real yields in the U.S. and the Fed's balance sheet expansion

• The Fed's balance sheet contraction

• High real yields in the U.S.

Which emerging markets are mentioned as having potential for carry trades?

• South Africa and Nigeria

• India and China

• Egypt and Turkey

• Brazil and Argentina