Carry trades have come under pressure ahead of the FOMC rate decision. This has nothing to do with Japanese data since none was released overnight.
The Bank of Japan will be announcing their interest rate decision this evening, but we do not expect a reaction in the currency market since financial market turmoil and political uncertainty will prevent the BoJ from lifting interest rates. Instead, we expect carry trades to continue to move in lockstep with the Dow tomorrow in reaction to the Feds interest rate decision.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com