It’s too early to say, but the most interesting feature of this morning’s trade is the relative strength of the JPY given the rebound in equities, commodities and all things risky this morning. The JPY is normally the most reliable indicator on the market’s willingness to assume risk but it has shed that mantel thus far this morning.
My guess is it is a supply/demand issue in relatively lightly traded markets. There may be a “natural” USD/JPY seller in the market (or GBP/JPY seller, judging by the price action) and once those flows are sopped up, “normal” correlations may return and the JPY will weaken. If not, we may be seeing the prospect for massive fiscal stimulus and quantitative ease from the US beginning to unnerve investors. I’ll leave it to you to decide which. So far, I’m stumped.
