The yen was last up about 0.6% against the US$ at about 118.25 - 118.30. We wouldn’t be surprised to see 117 intra-day, but expect a 118+ close. Even with a quarter-point Bank of Japan [BoJ] rate hike next month, a 0.75% target is way below global rates — meaning a favorable rate gap for carry traders persists — especially as some central banks are still hiking. We don’t expect a significant unwinding of the yen carry trade, in spite of recent global market weakness (ex-China), which is at least partially being blamed on credit concerns meaning there is declining appetite for risk.

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