The Aussie dollar has rallied against the Swiss franc again on Wednesday, as the overall longer-term uptrend is very much intact. At this point, the carry trade is alive and well in the forex markets.
AUD/CHF
The Aussie dollar has rallied a bit during the early part of the trading session here on Wednesday, breaking to a fresh high. The Australian dollar, of course, is more risk appetite driven than the Swiss franc, and as a result, this is actually a good sign for risk assets in general.
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The swap at the end of every day, obviously, is positive. With the Swiss sticking to a 0 interest rate policy, the Australian dollar becomes a bit more attractive. Over the last couple of months, we've seen a pretty big move from the 0.5550 level, but this actually started back in November of last year. We had a perfect 45-degree angled channel from basically November to May. We went sideways for a couple of months, and now we have continued to see buying pressure.
Carry Trade Dynamics and Long-Term Outlook
Over the longer term, you get paid quite a bit to hold on to this pair if you are not overly exposed, meaning that you can handle the occasional pullback, and this is an excellent, at least in my opinion, carry trade type of play.
Rates are starting to calm down in some markets around the world, most importantly, the US bond markets, and that has a major influence on how risk gets separated and sent around the world.
It is worth noting that we are approaching a significant area of noise that extends all the way to the 0.5875 level going back into 2024 and 2025. This could be a bit of a fight, but overall, the carry trade continues to be attractive to traders.
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