The intraday reversal in the Dow has led to an intraday reversal in carry trades.
CHF/JPY and GBP/JPY ended the day in positive territory while EUR/JPY, AUD/JPY and CAD/JPY are basically unchanged. USD/JPY remained weak, but that was mostly due to broad based dollar weakness. Overnight data from Japan was strong with capital spending printing at 13.6 percent compared to the market?s 10.1 percent forecast. It is clear that this is where the increases corporate profitability is going. Employees have unfortunately been skipped over as corporations recycle their profits into capital spending. This is the primary problem preventing the Bank of Japan from raising interest rates. As long as wage growth is tepid, consumer spending will be weak.