Macro hedge funds are increasing bets that the yen will strengthen beyond JPY150 against the dollar by the end of the year, with some longer-dated options positions targeting a move towards JPY140, according to a report by Bloomberg.
Dollar-yen options activity has shifted decisively towards downside exposure for the currency pair. The most actively traded dollar-yen option on Tuesday was a November put with a JPY142.86 strike, according to CME Group data.
Across contracts expiring before the end of 2026, put volumes were more than three times those of calls, highlighting the extent of investor demand for positions that benefit from a stronger yen.
Dollar-yen was trading around ¥153.47 on Wednesday, down 0.3% by late morning in Hong Kong.
The yen’s ability to strengthen despite a stronger-than-expected US payrolls report has reinforced the bullish case among currency traders. Dollar-yen fell almost 5% in the week through Tuesday before recovering some ground, as investors unwound positions in yen-funded carry trades.
The move accelerated after hawkish comments from Bank of Japan Governor Kazuo Ueda and board member Hajime Takata. Dollar-yen’s break below JPY155 has been particularly significant for traders, as that level had previously acted as a key support point despite Japanese authorities intervening in the currency market earlier this year.
The prospect of further official action is adding another dimension to the trade. US Treasury Secretary Scott Bessent on Tuesday challenged investors to bet against efforts to strengthen the yen, adding to the sense that policymakers are closely focused on the currency.
Macro hedge funds have been among the most active participants in the shift.
Nomura said demand for options protecting against a weaker dollar has increased sharply among macro investors, with short positions building after dollar-yen broke through JPY155.
