With the Dow holding onto its recent gains and Japanese third quarter GDP revised downwards, the Yen crosses are up across the board
Weak capital expenditures and domestic demand is preventing the Japanese economy from recovering and unless the government finds a way to boost spending, growth will remain soft. For that reason, we do not expect any remarkable strength in the fourth quarter Tankan report which measures business activity and sentiment. The outlook of the Yen crosses continued to be tied to the outlook of the Dow. If the US stock market extends its gains, so will carry trades but if it begins to top out, watch out for another wave of carry liquidation.