The Most Popular Currency Trade In The World Had A Sharp And Violent Reversal Last Night

Hating/shorting the Japanese yen is an incredibly popular currency trade that's been on for a few months, as the country's new Prime Minister favors all kinds of monetary and fiscal easing.

Last night, it had a very sharp reversal.

Here's USD vs. JPY jutting straight down, a move that continues to this morning.

So what's the story?

Here's SocGen's Kit Juckes' take on it:

Japanese Economy Minister Akari Amari warned overnight that excessive yen weakness would cause a spike in import prices, and in so doing, triggered a correction in the strongest trend in currency markets. Official comments on policy and the currency have been one-way traffic – weakening the yen – since the elections last month. I suspect that thee is near-unanimity in the market that the yen has fallen too far, too fast, but also enthusiasm to sell into corrections such as this. Such consensus argues for a choppy market for now, rather than clear direction. T