[Calxy]

It’s worth being exact when talking about carry trades and the Yen. We like to think about a broad range of interest rate sensitive FX transactions as they may work in opposite directions as currently. Interest rate sensitive hedging flows have probably been firmly supportive of the Yen while investment outflows into higher yielding fixed income securities have been accelerating recently. Even the
very heavy maturity schedule in July for NZD denominated Uridashis appears to have been rolled over quite easily. One can therefore argue that “new” carry trades (in longer maturities) already seem to support a weaker Yen, while “old” carry trades (predominantly hidden in a long-standing hedging bias) may still be stuck in the system.