The Japanese Yen crosses are higher today on the heels of another 96 point rally in the Dow.
Given the size of the move in equities over the past 2 trading days, the rally in carry trades are unimpressive. We continue to believe that the correlation between equities and currencies are breaking down because the people who are buying stocks are not the same people who are buying carry trades. Also, there may not be new money flowing across the financial markets. Many of these dollars, Euros, and Yen may just be parked on the sidelines in the local currencies waiting for the next best opportunity. Japanese economic data was stronger than expected with the unemployment rate holding steady and overall household spending beating expectations. Industrial production is up next.
