Is decline in yen due to carry trade ? Or is the market questioning the credibility of the Japanese central bank indiscriminate money printing policies.

Usd/Yen - Since I posted my bearish views of dollar / yen on 12 Apr when it was traded at 125.4 and had a target of 134 and 147 , the first target has been hit today, frankly it came sooner than I thought.

The sell-off in the Treasury bond market over the past two weeks, with the 10-year Treasury bond yield rising from 2.70% on 26 May to 3.02%, has predictably triggered renewed downside pressure on the yen and as long as the US treasury yields continue to go higher it will cause the yen to decline further .

What is the key issue here for investor? Is decline in yen due to carry trade or is the market questioning the credibility of the Japanese central bank indiscriminate money printing policies.

How the yen behaves in the next downturn is the crucial issue on which investors need to be focusing.

If the yen hits my next target at 147, it will be unusual signal worth paying attention to and potentially a signal that the monetary madness of the previous decades is seeing its first credible market signal that it will no longer be tolerated.

It could lead to the next Global Financial crisis.

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