Yen Traders Should Expect Volatility

Traders expect volatility the next two days due to tomorrow’s release of the stress test results and Friday’s U.S. Unemployment Report.  Wild swings in the equity markets could lead to excessive volatility in the USD JPY.

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

Throughout the New York trading session the USD JPY traded on both sides of the market as stocks fluctuated between positive and negative.

Trading is expected to 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 will try to get a grasp on the direction of the U.S. economy.