Yen Buyers Hedging Bets

The Japanese Yen is trading higher despite the poor Japanese economy.Traders could be hedging against a stock market break or inanticipation of U.S. banking issues.

The Japanese Yen is trading higher despite the poor Japanese economy. Traders could be hedging against a stock market break or in anticipation of U.S. banking issues.

Today is “Stress Test Day” in the U.S. The 19 major banks analyzed by the Fed will receive the preliminary results of the recent stress tests performed by the top bank. These results will let the banks know what they need to do to achieve stability and where they are at risk. Some will be told they need capital now. Others will be informed of future situations where they would need to shore up capital requirements.

Speculation over who needs capital now or later may create volatile conditions in the stock market. Traders who have been selling the Yen in the carry trade may be reversing their positions in anticipation of this volatility.

Time is indicating the USD JPY is ripe for a reversal to the upside.  This move could occur closer to the last swing bottom at 95.95.