U.S. banking issues are driving investors to the Yen in early trading. Fear appears to be setting in and traders are seeking the safety of lower yielding assets.
U.S. banking issues are driving traders to the Yen in early trading. Fear has set in as traders are speculating that one or more major U.S. banks may not have the “substantial capital” the Fed is demanding.
It does not matter if the problems can be proved. Between now and May 4th when the final stress test results will be released, the Forex markets will be subject to excessive volatility as even a hint of a problem will fuel wild speculation.
Weakness in the equity markets is also triggering a reversal in the carry trade.