carry as background noise, a few questions worth asking
Posted: Fri Oct 30, 2026 10:09 am
Interest rate differentials are slow, but they set a tone for the day. Before treating a pair as having a carry backdrop, run through a few questions.
Which side pays? A long position in the higher-yielding currency usually receives swap, and the other side pays.
How big is the gap? A half-point difference barely matters intraday. A five-point gap can influence which way funding flows lean.
Is the gap widening or narrowing? Markets trade on changes in expectations rather than levels, so a shrinking gap can hurt the high yielder even while it still pays more.
Is volatility calm? Carry tends to behave best when volatility is low and gets unwound fast when it spikes.
Does the swap your broker charges match the underlying difference? Brokers often add a markup, and triple swap day falls on Wednesday for many currencies, though it varies.
None of this says where the next candle goes. It only says which direction slow money may be leaning.
Which of these questions do you actually check, and has swap ever changed your mind on a trade?
Which side pays? A long position in the higher-yielding currency usually receives swap, and the other side pays.
How big is the gap? A half-point difference barely matters intraday. A five-point gap can influence which way funding flows lean.
Is the gap widening or narrowing? Markets trade on changes in expectations rather than levels, so a shrinking gap can hurt the high yielder even while it still pays more.
Is volatility calm? Carry tends to behave best when volatility is low and gets unwound fast when it spikes.
Does the swap your broker charges match the underlying difference? Brokers often add a markup, and triple swap day falls on Wednesday for many currencies, though it varies.
None of this says where the next candle goes. It only says which direction slow money may be leaning.
Which of these questions do you actually check, and has swap ever changed your mind on a trade?