Japan’s rate hike to 1 percent has shattered the yen carry trade.
Hedge funds are being forced to sell dollar assets to cover losses.
This is forcing a “forced liquidation” cycle that hurts the dollar.
The Nikkei hit 70,000, but the euphoria is hiding the underlying panic.
When Japanese investors bring their money home, the DXY suffers.
This liquidity drain is the biggest threat to the current AI rally.
Money is fleeing tech and moving into gold and short-term debt.
Bank of Japan raised rates to 1 percent, marking the highest level since 1995.