With the Dow up 117 points today, it would be surprising if carry trades or the Japanese Yen crosses did not rally. The biggest strength was in NZD/JPY, AUD/JPY and CAD/JPY all of which benefitted from the sharp rise in commodity prices.
Leading indicators were flat which was right in line with expectations. This represents a deterioration from the prior month’s data. The Bank of Japan has zero room to alter interest rates even though Fukui hinted of a rate hike yesterday. As a country that imports nearly all of its oil, Japanese consumer spending stands to suffer greatly from the rise in oil prices which means that the rebound in the Japanese economy last quarter could be short lived.