Japan govermet make yen strong with carry trade only this way not another way

Once again, the risk attributes of the Japanese yen were binding the currency to a sharp rally in equities and general risk acceptance after the Federal Reserve announced it, along with a number of other central banks, were putting into effect a new plan to correct the persistent credit crunch. A more than 100 point USDJPY rally was triggered before US exchanges opened for trade as the pair tracked Dow equity futures higher. However, this correlation broke down when the Dow marked a sharp pull back when the New York evening session. From the economic docket, inflation data was in focus with the upstream DCGPI figure for November on tap. Though, a more modest than expected pull back in inflation pressures hardly raised the chances for a rate hike any time soon. Looking ahead, yen traders will likely keep an eye on the SNB decision as a general guide to the health of the carry trade