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The Dollar Index exchanged at almost a two-week high as investors fled higher-yielding currencies in favor of the relative safety of dollar-denominated assets.
Carry Trade
Deutsche Bank AG’s G10 FX Carry Basket index fell to 112.25, the lowest level since September. It gained 6.8 percent in 2012 after declining the previous two years as weak economic data in the U.S., Japan and the euro region led to speculation that central banks would keep rates low and inject money to boost growth. With those conditions waning, volatility has increased, which is negative for the carry trade because it depends on predictable interest rates across jurisdictions.
Fed Views
This week will see speeches from Fed Bank of Atlanta President Dennis Lockhart, Fed Bank of Richmond President Jeffrey Lacker, Fed Bank of Cleveland President Sandra Pianalto and Fed Bank of San Francisco President John Williams.
Rand, Krona
The South African rand strengthened against all 16 of its major peers after sovereign bond yields climbed to their highest level on a closing basis in a year. The rand increased 0.9 percent to 10.0713 per dollar.
Options Trading
Trading in over-the-counter foreign-exchange options totaled $34.4 billion, compared with $62 billion on June 21, according to data reported by U.S. banks to the Depository Trust Clearing Corp.. Volume in options on the dollar-yen exchange rate amounted to $8.3 billion, the largest share of trades at 24 percent. Euro-Dollar options were the second most-actively traded, at $6.4 billion, or 19 percent.
Dollar-yen options trading was 31 percent above the average for the past five Mondays at a similar time in the day. Euro-Dollar options trading was 141 percent above average.
