By Chuck Butler

The Japanese yen, and Chinese renminbi are the only currencies posting gains vs. the dollar. China, just back from a week of holidays, allowed the renminbi to gain vs. the dollar overnight. That's a good sign, considering the rumors circling about a slowdown in China.

But the Japanese yen is the big Kahuna moving against the dollar. Don't look now, but yen has a 103 handle! This begs the question: Is the carry trade truly dead in the water?

Just like the munchkins in the Wizard of Oz, we’ll have to wait and see if it is truly dead. As Glenda said, "Let the joyous news be spread, The Wicked Old Witch at last is dead!"

Seriously though, the Carry Trade does truly, look dead in the water, as the credit squeeze takes its toll on this once favorite investment strategy. Carry trades are "risk trades" as I've explained a hundred times before. That’s why the credit squeeze wiped them out.

Finally, the Asian currencies will be the next shoe to drop for the dollar. It looks like the carry trade is dead, and the Asian currencies, led by Japanese yen, can finally be left alone to trade straight up vs. the dollar.

So, we’re taking on water with the other currencies that have been so profitable for holders for over six years now, but Japanese yen is finally cut free of the carry trade.