More Volatilitiy - More Yen Unwinding

EUR/JPY - More Unwinding Helps Yen Appreciate

The Yen appreciated at the last minute after the Dow Jones turned a positive day into a negative after closing down 167 points in the final 2 hours. The Yen followed suit, gaining lots of ground against the USD and the EUR. Rumors are now surrounding Countrywide Financial's insolvency if creditors requested the sale of assets at current low prices.

Fed Reserve Bank of St. Louis President Poole said that there are no signs that the subprime troubles are interfering with the broader economy. If this happens to be the case, the unwinding of carry-trades may be temporary.

As of right now, I still don't believe the markets are ready to give up on higher yielding currencies such as the Aussie and the Kiwi. More to come.