Yen carry trade continues to dominate headlines

The Greenback gained some momentum overnight from three months lows against the Yen. This revival was helped by growth in Tokyo shares which helped stopped the week long sell off in risky assets that had been intensified by the Yen’s sharp rally.

Asian equity markets showed signs of recovery with the Nikkei stock average closing over one percent higher and putting a halt to the five day losing streak. The past week has given further evidence of the close links between the stock and currency markets.

Sterling gained against the Yen from a five month low seen in early trading which helped spark life into other high yielding currencies and saw the Aussie and Kiwi Dollar improve over one percent.

The past week has seen a significant volume of market players unwinding carry trades, in which low yielding currencies are used as a source of funds to purchase high yielding currencies and assets.

This has played a broad role in the Yen’s weakness which took it to 21 year lows this January. Traders are still wary of further possible carry trades in the not to distant future but recent gains for the majors will give some rest bite.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.