Mild Rally in the Dow Leads to Correction in Carry Trades

For the first time in the past week, the trading range in the Dow has been less than triple digits. Industrial production and vehicle sales were stronger than expected last month thanks to demand from Asia. Tonight we continue to have a lot of Japanese data due for release including unemployment, consumer prices and household spending.

Typically, CPI numbers are important but in this case, the data may not move the Japanese Yen. Instead, we will be watching how the Nikkei trades since the short term outlook for the Yen crosses are unclear. Longer term we expect weakness given the volatility in the equity and bond markets.