Yen continues to rise, global carry trade Close Position heats up

FXStreet News on July 24th, Jinshi data: The Japanese yen rose above a key level on Wednesday, driving global interest rate differential trades to close positions. The dollar fell below the 100-day moving average for the first time since mid-March and lost the psychological support level of 155, and technical indicators suggest that the downside momentum may continue. The Australian dollar, New Zealand dollar, and peso against the Japanese yen all fell by about 1%. Wednesday’s trend was dominated by the yen, which has pumped more than 4.5% since falling to nearly a 40-year low on July 3. Events such as the suspected intervention in the foreign exchange market by the Japanese authorities on July 11th and 12th, as well as comments by Trump and senior Japanese political figures on the yen, have helped drive the yen’s pump. In recent years, Japan’s ultra-low interest rates have made the yen a favored source of funds for arbitrage traders, who borrow funds to invest in higher-yielding currencies. With investors betting on further interest rate hikes in Japan and possible further intervention by the authorities in the foreign exchange market, this type of trade is closing positions.