Earlier this week, we talked about how if the markets continued in their current trend, it could lead to the unraveling of the yen carry trade exchange traded fund (ETF) investment strategy. Bryan Moore of The Financial Whiz argues the carry trade isn’t going anywhere just yet. Although the Japanese yen has been rising relative to the dollar, it’s unlikely the Japanese central bank will raise interest rates enough to have any effect on the carry trade. Moore sees all of the latest news as an instigator for panic selling.

Speaking of the yen’s appreciation, CurrencyShares Japanese Yen Trust (FXY) reached a new high yesterday. It is up 7% for the month and is 5.4% above its trend line. When the Federal Reserve announced its discount rate cut earlier today, the yen temporarily dropped, theoretically luring investors back, according to Min Zeng for Bloomberg.

As with any investment decision, know what is behind the ETF and what could affect its performance.

Read the disclosure, as Tom Lydon is a board member of Rydex Investments.

Tags: Currency ETFs, Federal Reserve, Japan