Markets

USD/JPY (USD/JPY)

A heavily traded currency pair reflecting the gap between US and Japanese interest rate policy, often sensitive to Bank of Japan intervention. For decades, Japan's near-zero interest rates made the yen the preferred funding currency for the so-called 'carry trade', where investors borrow cheap yen to invest in higher-yielding assets elsewhere. A sudden unwind of these positions can trigger sharp moves even in markets that have nothing directly to do with Japan.