Japanese Yen: Carry Trade Demand and Weak Data Sends Yen Tumbling

[DailyFx]

The Japanese Yen weakened significantly on the weight of carry trade demand and soft economic data. Activity in Japan continues to be lackluster with the all industry index falling by the largest amount in 3 years.

Disappointments all around in economic data has made it difficult for the Yen to rally. Tonight however, we could have our first surprise with a weak yen expected to help drive stronger exports. Meanwhile the US government remains very critical of China despite their latest moves. Paulson warned today that the country is getting impatient with the weakness of the Yuan and as a result, the Chinese will likely hear "strong views" from Congress. He urged for faster Yuan appreciation, but issued no major threats, which led to little reaction in the Yen.