Japanese stocks fell sharply today as the yen remains strong. Earlier this morning the yen was below 82 per U.S. dollar, which is near the strongest level it has been all year. It also caps a sharp run-up since June when it was nearly 95 per dollar.
However, according to the ‘FX Flow’ chart below from Morgan Stanley, Japanese exporters might get some breathing room. This is because traders are now net-short the yen, after having been substantially net long since June:
(Via Morgan Stanley, MS FX Flows Chart Pack, Calvin Tse, 11 October 2010)