Since The Fed ended QE3, the world's FX markets have become increasingly turmoily as the loss of Janet's foot on the throat of volatility sends chaotic sprres through carry traders' P&L. In fact, after rising 6 days in a row amid Japanese Yen strength, Global FX rates are the most turbulent since January 2012.
As Bloomberg reports, volatility in currencies of the Group-of-Seven nations climbed for a sixth straight day Friday, the longest streak of increases this year. Price swings accelerated after the yen strengthened past 110 per dollar for the first time in almost 18 months this week, fueling speculation on whether the Bank of Japan will intervene to weaken its currency.
The trouble with turmoiling FX markets is it forces deleveraging in carry trades and tightens the much-needed liquidity that unerlies the fast-money purchasing of risky-assets around the world. It is no coincidence that as FX volatility has surged in the last year, so equity performance has ebbed.