We should all know by now that forex trading isn’t easy money. In addition, also the relatively easy path of riding on a carry trade is not the best bet at the moment. For a very long time, traders could be quite passive: by buying a currency with a high interest rate and selling another with a lower one, enjoying the differential. NZD/JPY and AUD/JPY had a huge interest rate gap. This worked as long as currency values remained stable. This all blew up when markets collapsed in late 2008. However, with limited global recovery, new opportunities came around: the kiwi and the Aussie even made big gains against the dollar, enabling traders to enjoy both the change in value and the interest rate differentials. The dollar replaced the yen as the funding currency. Now, at the fourth anniversary of the crisis is behind us, the carry trade could seem attractive using another funding currency: the Swiss franc. The franc is trading almost in tandem with the euro and its debt crisis, and the interest rate nears zero. So, would Long AUD/CHF work as a carry trade? Not necessarily so. Interest rates are going down in the land down under. Worries about global growth and especially Chinese growth weigh on the Aussie. In addition, the franc’s peg to the euro, though very successful, is not eternal. A surprising move in Europe could find the SNB unprepared, and the levee might break. A sudden rise in the value of the franc would ruin long months of carrying. So, perhaps it’s time to return to the yen? With ever escalating rhetoric from Japanese authorities, an intervention to weaken the yen might be seen. Also here, past experience shows yet again, that it may take a very long time until an intervention actually happens, and it isn’t that successful. Building a strategy on such a move could be like building a castle in the sand. On the other side of the equation, are there other high yielding currencies that could work? Is the kiwi a better option? The interest rate is low and it is also vulnerable to global growth. Do you carry trade? If so, on which currency pairs? Do you think that the carry trade will make a comeback anytime soon? Further reading: 5 Most Predictable Currency Pairs Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Opinions share Read Next Forex Daily Outlook October 11 2012 Anat Dror 10 years We should all know by now that forex trading isn't easy money. In addition, also the relatively easy path of riding on a carry trade is not the best bet at the moment. For a very long time, traders could be quite passive: by buying a currency with a high interest rate and selling another with a lower one, enjoying the differential. NZD/JPY and AUD/JPY had a huge interest rate gap. This worked as long as currency values remained stable. This all blew up when markets collapsed in late 2008. However, with limited global recovery, new opportunities came around:… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.