Hedge funds and asset managers are taking sharply opposing positions on the Japanese yen, with leveraged funds ramping up bearish bets while traditional managers maintain bullish exposure, according to a report by Bloomberg, citing data from the Commodity Futures Trading Commission (CFTC).
The divergence, near its widest since 2007, highlights the uncertainty facing investors in the world’s third-most traded currency. CFTC data to 16 September shows hedge funds holding a net 58,811 short contracts, while asset managers are clinging to 71,162 long positions that would profit from yen strength.
The yen has been one of the weakest G10 currencies this year, up just 6% against the dollar, compared with a 13% gain for the Swiss franc. Analysts point to political risks in Tokyo, ongoing trade tensions with Washington, and doubts over the Bank of Japan’s policy path as key drivers of bearish sentiment.
The BOJ kept rates on hold last week, though dissent among policymakers suggests the possibility of a hike as early as October. Market participants are now focused on the Tankan survey due 1 October for clues on the central bank’s next move.
