Carry trades are having a tough time extending their past week?s gains. Although we rarely bring technicals into this report, it is important to note that the majority of the Japanese Yen crosses have failed right at their 100-day simple moving averages.
Today, the Dow also turned around lunchtime exacerbating the pressure on the Yen crosses. The minutes from the Bank of Japan?s monetary policy meeting last month will be released tonight along with the corporate service price index. We do not expect any major surprises there. If anything, the minutes should reveal a central bank that is still hawkish even though they do not have the flexibility to alter interest rates. Japan also welcomes a new Prime Minister. Fukuda has been chosen to be the new President of the LDP; he is a son of a former Prime Minister and is a seasoned politician.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com