How to trade forex cross pairs

The traders not only got paid with higher interest rates, but also through capital appreciation. Carry trade crosses reversed violently when the financial crisis hit in September 2008 and AUD/JPY went from 105 to 55 EUR/JPY from 170 to 114, GBP/JPY from 251 to 118 (see “Carrying charges,”).

In addition to interest spreads that ballooned between Treasuries and junk bonds, nothing reflected extreme fear in the markets better than the carry trades collapse. Another very interesting group of currencies is commodity currencies: Australian, Canadian and New Zealand dollars, Brazilian real, South African rand and Russian ruble. These countries are major exporters of commodities and their currencies respond to strength or weakness of global economies accordingly.