One look at the Dow and it is not hard to guess how the Japanese Yen behaved over the past 24 hours. Another record high in the US stock market has sent the yen tumbling once again.
Carry trades have continued to perform well with AUD/JPY hitting a fresh 15 year high, NZD/JPY a 17 year high, CAD/JPY a 15 year high and GBP/JPY a 9 year high. As we have said often, the carry will die only when the Dow dies and at this point, the Dow remains strong. The Chinese stock markets are also continuing to rebound, which raises the risk of another policy change by the Chinese government over the next few weeks. Unlike the rest of the world, there is barely any data of consequence in Japan, so expect stocks to continue to drive the currency?s performance.