Japanese Yen Down as FX Carry Trades Gain - Watch for Japanese GDP Overnight

The Japanese yen fell against most of the majors on a day that FX carry trades continued to make headway. The status of the correlation between the JPY crosses and equities could be tested tonight, though, when Japan’s Cabinet Office will release preliminary growth readings. After three consecutive quarters of contraction, the outlook doesn’t look good. There are signs that businesses are suffering considerably at the hands of waning domestic and foreign demand. Consumers have very little to work with these days, as the jobless rate has slowly climbed to a nearly five-year high, and perhaps even worse, cash earnings growth contracted by 3.7 percent in March from a year earlier, the sharpest drop since 2002. Meanwhile, Japanese exporters have had to grapple with not only slowing global growth, but also the appreciation of the Japanese yen, all of which has led foreign-bound shipments to tumble a whopping 46.5 percent in March from a year ago, according to figures published by the Ministry of Finance. As a result, a Bloomberg News poll of economists shows expectations for GDP to fall 4.3 percent in Q1, with the annualized rate forecasted to plummet by a record 16.1 percent.

[B]**For a full list of upcoming event risk and past releases, go to [/B][B]www.dailyfx.com/calendar[/B]

Check out the Daily Fundamentals in its entirety for a look at what happened throughout the FX markets today.[/B]