The Japanese Yen is finally appreciating, though how long the
upward streak will last is anyone’s guess. These days, the Yen rises and falls on the
whims of carry traders. However, the
enemy of the carry trade is volatility and the Fed’s lowering of US interest
rates injected enough uncertainty into the markets to send carry traders slowly
towards the exit. As a result,
currencies such as the Australian Dollar and New Zealand Kiwi, long popular with
in carry trading circles, were quickly dumped as traders bought Yen to cover
their positions. Whether the Yen can
sustain its momentum depends primarily on the Central Bank of Japan. Bloomberg News reports:
Carry trades utilizing the New Zealand dollar lost 1.9
percent today, according to data compiled by Bloomberg, after gaining 2.3
percent so far this week as the Federal Reserve reduced the U.S. rate a half
percentage point to 4.75 percent.
Read More: New Zealand Dollar Drops as Japanese Investors Return to Yen
Original post by Jimmy Atkinson and software by Elliott Back
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