Last night, news that private equity firm KKR warned that they will be delaying repayments for a second time, triggered a wave of carry trade selling.
That move was reversed in the NY trading session when the Dow went from being down over 100 points to up 90. Although this could lead to some follow through strength in the Yen crosses, we remain bearish because this type of volatility in the financial markets is more negative than positive for carry trades. The Japanese remain concerned about growth which suggests continued weakness in data.