CFTC Data Shows Significant Reduction in Short Yen Positions Following Japan’s Currency Market Intervention

According to recent Commodity Futures Trading Commission (CFTC) data, hedge funds and speculators have significantly reduced their short yen positions in response to Japan’s suspected currency market intervention to support the yen. In the week ending May 7, net short yen positions decreased by 20%, marking the largest weekly yen-bullish swing since March 2020. However, it should be noted that some of this position may have been rebuilt as the dollar has risen above 155.00 yen. Experts suggest that the Ministry of Finance’s intervention could have lasting impacts on the yen, but the broader macro environment remains negatively affecting the currency. As long as the Bank of Japan (BOJ) shows no urgency in raising interest rates, Deutsche Bank’s George Saravelos believes that the fundamental negative backdrop for the yen will not change. Recent economic indicators in Japan have been mixed, and some analysts suggest that BOJ Governor Kazuo Ueda may have taken a less hawkish tone in a recent speech. Overall, CFTC funds’ bullish dollar bets have decreased, with their total value of long dollar positions falling to $27.7bn from $32.7bn in the previous week and $36.3bn the week before that.