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STORY: Monday's sell-off was exacerbated by investors winding down yen-funded trades that had been used to finance the acquisition of stocks for years after a surprise Bank of Japan rate hike last week.

Fitzpatrick explains:

"The very popular trade over the last several years is to borrow anywhere where you have a cheaper currency. In this case, it would have been Japan. So you borrow the cheap Japanese yen. You take that money and you turn around and you invest it in some sort of higher yielding assets, whether that's in the U.S., U.S. Treasuries, or it could be in Europe or elsewhere. But you have a very sizable difference in the interest rate available in certain economies versus Japan. But now that you're seeing the Japanese policymakers raise rates and the global central banks lower rates, well, guess what? That trade, that's the carry trade is no longer as attractive as it had been. And that is a very, very popular trade. So when that unwinds, all kinds of technical indicators now take place, and then you're forced to unwind a number of trades that are going to put a lot of stress on the Japanese currency."

The so-called 'carry trade' is commonly used in currency markets where investors borrow money from economies with low interest rates such as Japan or Switzerland, to fund investments in higher-yielding assets - this time stocks - elsewhere.