Carry Traders Pivot From Dollar to Euro and Aussie as Funding-Cost Pain Bites
- As the DXY pushes toward 101 and dollar-funded carry trades get stretched, EM investors are rotating into euro- and Australian-dollar-funded carry, according to Bloomberg (https://www.bloomberg.com/news/articles/2026-07-05/carry-traders-shift-away-from-dollar-for-emerging-market-bets).
- The shift coincides with the Fed-cut bets ignited by Friday's 57K June payroll miss and could amplify the dollar's downside if positions are unwound in size.
- India, Brazil and select EM FX could benefit disproportionately from the new funding-currency mix.