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Why commodity prices and stocks are falling.

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The so-called yen carry trade has begun to scale back, and the Canadian dollar is one of the many victims, explained John Johnston, chief strategist for Harbour Group at RBC Dominion Securities. The carry trade saw traders play rock-bottom Japanese interest rates off against the relatively higher interest rates in the rest of the world, a development that had the effect of driving up some currencies, especially in commodities-based economies. Now that markets have suddenly turned their backs on high-risk trading, "the carry trade is unwinding," Mr. Johnston said. As a result, commodities-based currencies such as the Australian and New Zealand dollars, as well as the Canadian dollar, are all taking major hits.