Japanese Yen Crosses Tumble on Equity Market Weakness

With the Dow tumbling over 200 points, it would be surprising if carry trades actually managed to stay in positive territory.

All of the crosses are down sharply and USDJPY is now trading at a fresh 2 year low against the US dollar. News has surfaced that China may be planning to invest some of their FX reserves into Japanese stocks. Supposedly their request was denied but when the CIC was contacted later, they said that no decision has been made yet. The bottom line is that China is actively looking for ways to diversify their reserves which will be positive for the currencies of countries outside of the US that they do a lot of trade with China such as Japan.

[B]Written By Kathy Lien, Chief Currency Strategist for DailyFx.com[/B]