G10 Carry Trades Surge Year-to-Date as Australian Dollar and Norwegian Krone Rise 9%-10% Amid Low Volatility

According to Jin10, G10 currency carry trades have surged in 2026 as low volatility in equities and foreign exchange markets has revived investor appetite for interest rate differentials. Australian dollar and Norwegian krone, which benefit from higher central bank rates above 4%, have risen 9% and 10% respectively year-to-date against the U.S. dollar, while the Japanese yen continues to weaken despite recent intervention by authorities.

Citigroup’s analysis shows that a simple strategy of buying the five highest-yielding G10 currencies and selling the five lowest-yielding ones has delivered returns slightly above 4% year-to-date without leverage. The widening gap between policy rates—with Australia and Norway at 4%+, the UK near 4%, Japan below 1%, and Switzerland at 0%—has made currency-based carry trades attractive again as equity market rallies push volatility to multi-year lows.