It is essential to read the news, just as you read charts, that is, "How will this information affect investors' perception of future supply and demand?" News is a bit harder to read than charts because journalists aren't traders. They key on on buzzwords rather than trends and reversals. Use a discerning eye to pick out only information that concerns changes in supply and demand.
Here's an annotated article from todays FT:
An example of a carry trade: click.
This is a classic tale of supply and demand. The Bank of Japan controls the supply of the ¥. Carry trades are determining the demand. This is a long-term trend in effect and sensitive to imbalances. With the US paying nearly 6% in interest and Japan paying only 0.25% it's unlikely that there will be any long-term effect. However, a change from 0.25 to 0.50 which is being contemplated is a 100% increase, so it's likely to have an effect in short-term trading.
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