Steven Towns

Bullish On The Yen Following The Selloff

We're seeing a rather quick strengthening of the yen, currently approaching ¥117. I didn't expect the yen to strengthen this fast, which leads me to think that with equities falling apart, even in Japan (at least partially due to the stronger yen), that the carry trade could fall like dominoes. The underlying theme I'm hearing out of Asia and among foreigner investors with Asia exposure is to "reduce risk". Essentially that means liquidation and is either putting direct pressure on the yen as carry trades unwind, or is shaking out the weak that believe the carry is/will fall(ing) apart. I'm not sure we're necessarily seeing both on a large scale because things could really get interesting, if so.