Global selloff continues on US economy fears

Thursday’s rise in jobless claims led to a market meltdown in the US stock market as investors became concerned that the Federal Reserve made the wrong decision by keeping rates unchanged on Wednesday. 

This was further intensified by a rise to 4.3% in US unemployment data on Friday. Meanwhile, a significant rise in the Japanese Yen following the Bank of Japan’s decision to  finally raise rates has added fuel to the fire, making Japanese stocks less attractive. This has led to the worst selloff in Japanese stocks since 1987.

The Bank of Japan hiking rates last week has caused some of the carry trade to unwind, hurting stocks. Many traders were borrowing Yen (JPY) at low interest rates, converted them to USD and used this to buy US stocks. But now, with higher rates in Japan, not only must they pay higher interest for the yen they borrowed, they are now facing forex losses as well.

What’s your position on USD/JPY, the Japan 225 and the US indices – US Tech 100, US 500 and US Wall Street 30?

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