The Yen crosses reversed sharply on the back of the rebound in the Dow. The biggest winners were CAD/JPY, NZD/JPY and AUD/JPY. The long wicks on each of the yen crosses suggest that we could see a further rebound over the next 24 hours especially since the Dow found support today at the same level that it did back in June, which makes this a potential triple bottom.
Carry trades thrive in a low volatility environment. Although the VIX hit a 1 year high intraday, it closed up marginally. Bottom pickers need to be careful however since intraday surprises in the Dow have become the norm. All it takes is another major blowup by a hedge fund or mortgage lender and a technically sound scenario could become completely invalidated. Keep watching the Dow in the meantime since the Yen crosses are moving in lockstep with the equity index. For a clue on how the US market could behave, watch Asian stocks tonight.