Japanese Yen: Carry-ed Away

Stronger CPI nor hawkish commentary from the Bank of Japan have been able to revive the Japanese yen, as carry trades take their toll on the low-yielding currency. News over the weekend that a member of Prime Minister Shinzo Abe?s cabinet linked to a series of political funding scandals committed suicide barely made an impact on the yen either, though Japanese equity markets saw domestically focused stocks take a hit.

Over the course of this week, traders will be waiting to see if a round of encouraging economic will give the currency a reprieve. If we see positive surprises in Retail Trade and Overall Household Spending on the back of stronger consumption in the first quarter GDP report, the yen may start to react to fundamentals in a more consistent manner. However, it?s even more likely that a major event, such as yuan revaluation, will need to take place before the markets witness a significant unwinding of carry trades.