The Zhitong Finance App learned that since the US and Japan implemented a historic joint intervention, hedge funds have further reduced their bearish positions against the yen, indicating that the negative sentiment of the market about this currency has abated.
According to data released by the US Commodity Futures Trading Commission (CFTC) on Friday, the total number of short Japanese yen contracts held by leveraged funds decreased by 6.5% to 59,526 in the week ending August 11. Overall, hedge funds have cut short yen positions by more than half since the two countries' authorities collaborated to support the yen around the end of July.
However, the yen still depreciated by about 1% this week. The New York session was reported at 159.35 at the end of Friday, taking back much of the increase caused by official intervention. This has left market participants on high alert for possible further market intervention by the Japanese authorities and a hawkish shift in Bank of Japan policy.
“Since the market has previously shorted the yen on a large scale and is in a passive situation, investors will naturally cut their positions in the face of rising risks,” said Pioneer Investments strategist Paresh Upadhyaya.
CFTC data provided investors with a snapshot of foreign exchange market sentiment with a daily trading volume of 9.5 trillion US dollars, revealing positions established by hedge funds and asset managers through derivatives.
In terms of other currencies, hedge funds increased their bullish bets on the pound, pushing their long positions against the pound to the most optimistic level since February this year; short bets on the New Zealand dollar rose to the highest record since CFTC data were available in 2006; at the same time, the level of bullishness against the Mexican peso rose to the highest level since June 2024.
Overall, hedge funds, asset managers, and other speculators cut their bullish dollar positions to around $36.8 billion.
The following is a breakdown of changes in positions in major currencies:
The net position adjustments for leveraged funds are as follows:
- The net short yen decreased by 4,107 contracts to 59,526 contracts
- EUR net shorts increased by 4,622 contracts to 77,671
- The net long in GBP increased by 3,683 contracts to 42,722
- The net long in the Australian dollar increased by 7,737 contracts to 45,727
- NZD net shorts increased by 3,246 contracts to 34,031
- Net shortfall in CAD decreased by 9,822 contracts to 92,487
- CHF net shorts increased by 1,854 contracts to 14,061
- Net long in Mexican pesos increased by 8,568 contracts to 76,408
The net position adjustments for asset management companies are as follows:
- Net shortfall in yen decreased by 18,530 contracts to 24,215 contracts
- EUR net longs increased by 9,607 contracts to 254,320
- GBP net shorts decreased by 7,307 contracts to 120,070 contracts
- AUD net shorts increased by 7,754 contracts to 43,097
- NZD net shorts decreased by 4,730 contracts to 29,247
- CAD net shorts increased by 2,227 contracts to 104,250
- CHF net shorts decreased by 1,445 contracts to 38,322
- Net long in Mexican pesos increased by 8,686 contracts to 34,186