Forex carry trades rocketed higher on Wednesday, as the Japanese yen tumbled more than 3 percent versus high-yielding currencies like the New Zealand dollar and Australian dollar, while falling over 1.5 percent against the euro and British pound.
Forex carry trades rocketed higher on Wednesday, as the Japanese yen tumbled more than 3 percent versus high-yielding currencies like the New Zealand dollar and Australian dollar, while falling over 1.5 percent against the euro and British pound. This had mostly to do with an improvement in risk appetite, but some are speculating that the Bank of Japan may actually cut rates tonight. According to a Bloomberg News polls, only 2 of the 32 economists surveyed think the BOH will do so. However, I’m with the majority on this one, and I would be absolutely floored if the BOJ did anything but leave rates unchanged at 0.50 percent. It was just in the summer of 2006 that the central bank finally moved away from ZIRP, or Zero Interest Rate Policy, which they implemented in 2001. With interest rates already so low, a reduction is highly unlikely to have a significant impact on Japanese growth, so I don’t think the BOJ will believe it’s worth their while to cut. While BOJ rate decisions don’t usually have a big impact on the Japanese yen, the speculation surrounding this news could lead the low-yielding currency to gain if they do indeed leave rates unchanged. Related Articles: Japanese Yen Will Hold Its Gains As Long As Risk Dominates, Australian Dollar Losses May Continue As Very Little Support Remains Check out Daily Fundamentals in its entirety for analysis and outlooks on the US dollar, euro, British pound, Japanese yen, and the commodity dollars.