It is hard to argue with USD/JPY extending this correction to the 140 area It is hard to argue with USD/JPY extending this correction to the 140 area, ING’s FX strategist Chris Turner notes.

Carry trade to extend beyond speculative positions

“We think the unwind of the carry trade can extend beyond speculative positions among fast-moving accounts such as Commodity Trading Advisors and into banks and non-bank financial institutions funding operations cheaply in the Yen.”

“We thing that the one-year FX options market will show whether this community is now hedging too. This does seem to be the case with the one-year USD/JPY risk reversal going very bid for JPY calls.”

“It is hard to argue with USD/JPY extending this correction to the 140 area – which we had seen as the outside risk last week.”