Yen Selling Resumes Once Again

The currency market seems to be extremely schizophrenic at the moment as they love the yen one minute and hate it the next. Over the past few days, the Japanese Yen crosses have been swinging 10 to 20 pips at the blink of an eye.

This may of course be due to lower volume, but at the same time, it is also due to uncertainty. Traders are waiting for the next shoe to drop and depending upon whether that will comes in the form of another big blowup or an interest rate cut by the Federal Reserve first will determine where the Yen crosses are headed next. For the time being, we prefer to err on the side of caution and avoid jumping into the carry trade. Meanwhile Prime Minister Abe?s Cabinet Shakeup has helped to boost his approval ratings significantly. For the first time since May, his approval ratings were above 40 percent. Japanese retail sales are due for release tonight along with small business confidence. Both figures are expected to be weak.