The Japanese Yen crosses gave back some of yesterday’s gains but that does not mean that the carry trade rebound is over. The Dow Jones Industrial Average staged a very impressive intraday rally having been down as much as 120 points around 2pm ET. So far, the financial markets have not had the reaction that central banks may have wanted from yesterday’s big announcement which suggests that these central banks could have more tricks up their sleeve. The $40 billion in special loans is not a lot but the first coordinated by central banks from around the world since September 2001 indicates the severity of the credit squeeze in the eyes of global policy makers. They are testing the waters to see if banks will respond to the cheaper liquidity. If they do not, we could see more attempts at finding creative ways to inject liquidity into the financial system and boost investor confidence. For the currency market, this means a possible rebound in carry trades thanks to a continual rally in US equities. The Japanese Quarterly Tankan report is due for release tonight. In the past, this report has been very market moving, but in recent quarters it has lost its impact on the Yen because business sentiment has done little to give the central bank more or less reasons to raise interest rates. We expect the Tankan to be weaker because consumer sentiment continues to fall and borrowing costs continue to rise giving Japanese businesses little reason to be confident.