Carry Trades Rebound Despite Possible Upgrade by Moody?s

Demand for carry trades continues to remain strong with EUR/JPY a hair shy of hitting a new record high while both AUD/JPY and NZD/JPY are rallying back towards their decade highs. Stock markets around the world are up which means that risk aversion continues to remain low

This is further confirmed by the fact that the Thai Baht, which is a high risk currency hit a new 10 year high. There was no economic data released from Japan overnight but rating agency Moody?s said that they are considering upgrading Japan?s sovereign debt rating. They felt that the economy is at an “inflection point” and they will be watching closely for further improvements in growth. Yen traders have completely shrugged this off. Leading indicators are due for release tomorrow and they are expected to improve.