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Monitoring
Jul 6, 2026
The Yen Carry Spring Is Loaded Again
The Japanese yen is near its weakest level in roughly 40 years. The last time this carry trade snapped, in August 2024, markets fell hard in days. The spring is loaded, not triggered.
THE SIGNAL
Axios reported the yen had fallen to its weakest level against the dollar since 1986. Trading Economics showed USD/JPY around the low-160s on July 6. The setup points to renewed yen-funded carry pressure, with investors borrowing cheap yen and buying higher-return dollar assets. (Secondary: https://tradingeconomics.com/japan/currency)
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2026-07-01
THESIS CONNECTION
A lot of this year's buying may not be domestic liquidity. It may be foreign money borrowing in cheap yen and won to buy dollar assets. The rally's vulnerability is not only the Fed. It is a currency move that forces borrowed money home. That makes Bank of Japan action, suspected intervention, and the Bank of Korea meeting on July 16 important trigger points, not just U.S. data.
WHAT TO WATCH
- Bank of Korea meeting July 16 — a hike would be a specific trigger.
- USDJPY: sudden yen strength is the tell the spring is releasing.
- Any confirmed BoJ intervention.
- Korean won stress and foreign selling in Korean equities.
- August 2024 as the template for how fast it can move.
⚡ Carry unwind loaded, not triggered.