Expect Volatile Trading in USD JPY

Trading in the USD JPY could be volatile the next two days as traders await tomorrow’sbank stress test results and Friday’s U.S. Non-Farm Payrolls Report.

The sharp rise in U.S. equity markets led to selling pressure early this morning on the Japanese Yen. The rally in stocks created renewed interest in the carry trade as investors sold Yen to invest in higher yielding currencies.

Since early morning the Japanese Yen has traded on both sides of the market as stocks fluctuated between positive and negative. Trading could be volatile the next two days as traders await tomorrow’s bank stress test results and Friday’s U.S. Non-Farm Payrolls Report. If the reaction to today’s release of the ADP employment report is any indication, the next two days could be characterized by a series of wild swings as traders try to get a grasp on the direction of the U.S. economy.