Hedge funds sharply reduced their bullish exposure to the Japanese yen last week, even as long-term asset managers modestly raised their positions – highlighting divergent views on the currency’s direction amid rising market uncertainty, according to a report by Bloomberg.
The report cites the latest data from the Commodity Futures Trading Commission (CFTC) as revealing that leveraged funds cut their net long yen positions by 12,183 contracts in the week ending 27 May – marking the largest weekly reduction of bullish yen bets so far in 2025. In contrast, asset managers added 3,218 long contracts over the same period.
The shift reflects mounting indecision across trading desks over the yen’s trajectory, with conflicting macro signals clouding positioning strategies.
The yen began last week trading near a one-month high, buoyed by speculation of further intervention from Japanese authorities to stabilise domestic bond markets. However, those gains quickly faded as uncertainty around the US dollar’s path—fuelled by ongoing trade and tariff tensions—kept FX markets on edge.
The currency regained some ground on Monday, posting a third straight day of gains, with the yen rising 0.3% to 143.54 per dollar. The move came in response to renewed geopolitical friction, as former US President Donald Trump vowed to double tariffs on steel and aluminium imports, accusing China of violating prior agreements – a development that reignited demand for traditional safe-haven assets.
