> ## Documentation Index
> Fetch the complete documentation index at: https://financecontext.com/llms.txt
> Use this file to discover all available pages before exploring further.

# /analyze-fx-carry

> Evaluate FX carry trade opportunities with spot, forwards, vol surface, and historical context

## What is an FX Carry Trade?

A carry trade is one of the oldest and most intuitive strategies in foreign exchange markets. The concept is simple: borrow money in a currency with a low interest rate (e.g., Japanese yen at 0.5%) and invest it in a currency with a high interest rate (e.g., Australian dollar at 4.5%). You earn the **interest rate differential** (the "carry") as long as the exchange rate does not move against you by more than the carry you earn.

The carry shows up in the FX market through **forward points** -- the difference between the spot rate and the forward rate. A currency with higher interest rates trades at a forward discount (the forward rate is lower than the spot), meaning a long position in that currency earns positive carry. The critical risk metric is the **carry-to-vol ratio**: annualized carry divided by the implied volatility. A high carry-to-vol ratio means the carry is attractive relative to the risk of adverse spot moves.

## Command

```bash theme={null}
/analyze-fx-carry <currency pair e.g. USDJPY> [tenor e.g. 3M]
```

Evaluates carry trade opportunities by combining spot rates, forward points, carry term structure, volatility risk, and historical context.

## Workflow

<Steps>
  <Step title="Get Spot Rate">Calls `fx_spot_price` for mid/bid/ask and bid-ask spread.</Step>
  <Step title="Price Forward at Target Tenor">Calls `fx_forward_price` to compute annualized carry.</Step>
  <Step title="Map Full Carry Curve">Calls `fx_forward_curve` across all tenors to find the optimal tenor.</Step>
  <Step title="Assess Volatility Risk">Calls `fx_vol_surface` for ATM vol, risk reversal, and butterfly. Computes carry-to-vol ratio.</Step>
  <Step title="Historical Context">Calls `tscc_historical_pricing_summaries` for 1Y daily data to assess trend and range.</Step>
  <Step title="Synthesize">Presents carry-to-vol ratio, assessment (attractive / moderate / unattractive), and supporting data.</Step>
</Steps>

## Output

Lead with carry-to-vol ratio and overall assessment. Follow with spot and forward pricing, carry term structure table, vol surface snapshot, and historical context.

## Related Skill

See the [FX Carry Trade skill](/en/partner-built/lseg/skills/fx-carry-trade) for domain knowledge on carry frameworks and risk metrics.