Hedge Funds Slash Bets Against Yen After Likely FX Intervention

(Bloomberg) -- Hedge funds slashed their bets against the yen by most since March 2020 after Japanese authorities likely stepped into the market in a bid to prop up the currency.

Most Read from Bloomberg

• Putin Names Economist as Defense Minister in Surprise Reshuffle

• Trump Vows ‘Day One’ Executive Order Targeting Offshore Wind

• How One Brooklyn Neighborhood Became a Nightclub Haven

• Trump Pledges Across-the-Board Tax Cuts If He Returns to Office

Those leveraged investors held more than 81,000 contracts tied to wagers that the yen will fall in the week ending Tuesday, marking a drop of nearly 27,000 from the week prior, according to data released Friday from the Commodity Futures Trading Commission. That’s the biggest decline since the coronavirus was shuttering cities more than four years ago.

The reduction in bearish bets comes after sharp jumps in the currency last week and movements of around ¥9.4 trillion ($60.3 billion) in the central bank’s accounts indicate that Japan likely intervened twice to prop up the yen.

The currency weakened more than 1.7% against the dollar over the past five days.

“Interventions flushed out short-term traders, but the broader market held on to Japanese yen shorts and was rewarded with a nice bounce,” said Brad Bechtel, global head of FX at Jefferies Financial Group Inc.

• Leveraged funds adjusted net positions as follows:

  • Reduced net JPY short by 26,917 contracts to 81,335

  • Decreased net EUR short by 7,764 contracts to 32,400

  • Raised net GBP short by 5,748 contracts to 13,279

  • Decreased net AUD short by 2,663 contracts to 32,144

  • Trimmed net NZD long by 377 contracts to 8,697

  • Lowered net CAD short by 4,841 contracts to 49,289

  • Added net CHF short by 4,127 contracts to 13,162

  • Lowered net MXN long by 4,438 contracts to 47,958

• Asset managers changed net positions as follows:

  • Reduced net JPY short by 12,985 contracts to 53,270

  • Increased net EUR long by 4,595 contracts to 248,549

  • Reduced net GBP short by 25,067 contracts to 81,629

  • Cut net AUD short by 18,227 contracts to 69,837

  • Trimmed net NZD short by 1,583 contracts to 22,949

  • Raised net CAD short by 4,377 contracts to 59,319

  • Reduced net CHF short by 4,171 contracts to 28,251

  • Increased net MXN long by 4,664 contracts to 144,417

Most Read from Bloomberg Businessweek

• Corporate America Never Really Quit Forced Labor

• ‘The Caitlin Clark Effect Is Real,’ and It’s Already Changing the WNBA

• How Uniqlo’s ‘Millennial Birkin’ Is Beating Designer Bags

• Tim Cook Can’t Run Apple Forever. Who’s Next?

• The Company Preaching America’s Nuclear Revival

©2024 Bloomberg L.P.