The new yen longs were built before a week that went against them, so a position squeeze is the near-term risk if the yen keeps sliding, especially with Tokyo closed for Silver Week and liquidity thin. Against that, any official action would now land on a market leaning the other way, which could amplify a yen rebound. That leaves USD/JPY with two-way risk around the 157 area in the sessions ahead. The next weekly positioning report will show whether funds held or cut their yen longs after Friday’s move.
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Hedge funds flipped to net long the yen just before hikes from the Fed and BOJ, a Friday sell-off and a reported BOJ rate check tested their conviction.
Summary:
- Hedge funds turned positive on the yen for the first time since July 2025, weeks after US and Japanese authorities intervened to support the currency, according to Bloomberg (gated).
- Leveraged funds erased their bets against the yen in the week ending September 15 and held about ¥250 billion ($1.6 billion) in wagers on a stronger currency, CFTC data show. Their net position swung to roughly 20,000 contracts long from about 53,000 short.
- Asset managers also raised net yen longs, by around 54,000 contracts to roughly 55,000.
- The shift came shortly before the Federal Reserve and Bank of Japan raised rates this week, and may leave traders wrongfooted after the BOJ disappointed those hoping for clearer signs of more hikes.
- The yen fell as much as 1.3% on Friday before paring losses to trade around 157 per dollar late in New York. The Nikkei newspaper reported that the BOJ asked market participants about exchange-rate levels, a step often seen as a precursor to intervention.
- Speculative traders cut their positive dollar stance to the lowest since March as of September 15, and the dollar rose this week by the most in three months.
Hedge funds have turned positive on the yen for the first time since July 2025, a noteworthy shift in sentiment weeks after US and Japanese authorities intervened in the market to support the currency, according to Bloomberg. Leveraged traders erased their bets against the yen in the week ending September 15 and began building wagers on a stronger currency, based on Commodity Futures Trading Commission data released Friday. The funds held about ¥250 billion, or around $1.6 billion, in bets that the yen will strengthen, according to data compiled by Bloomberg.
The swing was sizeable. Leveraged funds moved to a net long position of roughly 20,000 contracts from a net short of about 53,000 the week before. Asset managers, the other group tracked in the report, also added to yen longs, raising their net long position by around 54,000 contracts to roughly 55,000. The CFTC figures offer a view of how hedge funds and asset managers are positioned in currency derivatives, though they are a weekly snapshot and lag events by several days.
The timing is awkward for the new bulls. The positioning data run through Tuesday, before the Federal Reserve and Bank of Japan both raised interest rates this week. Japanese policymakers disappointed some market participants who had hoped for clearer signs that the central bank would keep raising rates, and the yen fell as much as 1.3% on Friday before paring losses to trade around 157 per dollar late in New York. The dollar rose this week by the most in three months.
Adding to the picture, the Nikkei newspaper reported that the BOJ asked market participants about exchange-rate levels (a rate check) on Friday, a step often seen as a precursor to official intervention. The report has not been confirmed by the central bank.
The CFTC data showed other shifts in the currency market. Speculative traders, including asset managers and non-commercial players, cut their positive stance on the dollar to the lowest since March. Leveraged funds added to Australian dollar longs by around 11,000 contracts to roughly 59,000, trimmed their sterling longs by about 22,000 contracts to around 19,000 and lifted their euro shorts by about 5,000 contracts to roughly 51,000.
The data ended before the Fed and BOJ decisions and Friday’s slide, so they do not show whether funds have since held or reduced their yen longs. That is investingLive’s read of what the numbers can and cannot say. The next weekly report will show how positioning responded, and the BOJ’s next signals on rates and any official action on the currency will decide whether the new yen bulls are vindicated or forced to retreat.
“Yours!” on the rate check 😉
This article was written by Eamonn Sheridan at investinglive.com.