The Zhitong Finance App learned that after the Bank of Japan failed to send a sufficiently clear signal of further interest rate hikes to the market, hedge funds drastically cut bullish bets on yen. According to data released by the US Commodity Futures Trading Commission (CFTC) on Friday, the net long positions in yen held by leveraged funds were worth about 55.9 billion yen (about 355 million US dollars) for the week ending September 22, a sharp drop of nearly 80% from the previous week.
This change in position is particularly interesting because just a week before, hedge funds turned net bullish on yen for the first time since mid-2025. After just one week, traders quickly withdrew most of their bullish bets, showing that the Bank of Japan's latest policy signals failed to meet the market's expectations for further tightening monetary policy.
The Bank of Japan raised interest rates as expected by the market on September 17, but its policy statement did not show the degree of toughness expected by traders, nor did it make a clear commitment to continue raising interest rates in the future. Affected by this, the yen then weakened.
According to CFTC data, leveraged funds cut their net long positions in yen by 15,597 contracts for the week ending September 22, leaving only 4,472 contracts. In value terms, its bullish yen position plummeted nearly 80% from the previous week's level to 55.9 billion yen.
The still huge interest rate gap between Japan and the US is also an important factor in suppressing the yen. Meanwhile, the Japanese market was closed at the beginning of this week due to public holidays, which reduced the trading activity of the local market to a certain extent. However, the yen showed a clear rebound on Friday, rising 1.2% to 156.94 yen per dollar. Earlier, during meetings between Japanese officials and US officials, they discussed the problems caused by the weak yen, and related statements have once again drawn the market's attention to exchange rate policy.
In stark contrast to the rapid retreat of yen bulls, speculative capital's bullish sentiment against the US dollar has increased markedly. In the week ending September 22, speculative funds, including asset managers and non-commercial traders, have more than tripled their net bullish positions in the US dollar compared to the previous period. Meanwhile, the US dollar has just recorded its strongest performance for two consecutive weeks in six months.
The strengthening of the US dollar is closely related to recent changes in the Federal Reserve's policy expectations. Compared to the Bank of Japan's cautious statement on further interest rate hikes, the large spread between the US and Japan continues to support the US dollar, and also weakens the appeal of betting on the appreciation of the yen before.
CFTC data also shows that leveraged funds have not only cut yen longings, but have also taken a more cautious approach to various major non-US currencies as a whole. For the week ending September 22, leveraged funds increased net short positions in the euro by 7,450 to 58,805 contracts; reduced the net long in the British pound by 12,179 to 6,519; and the net long in the Australian dollar decreased by 3,615 to 55,684 contracts.
Meanwhile, net NZD shorts increased 2,897 to 5,216, CAD net shorts increased 7,719 to 49,123, and CHF net shorts increased 1,956 to 18,620. The net long in the Mexican peso decreased by 10,865 shares to 79,260 shares.
Asset management agencies are also showing similar trends. The net long in yen decreased by 12,323 shares to 42,498 shares, the net long in the euro fell by 30,892 shares to 244,673 shares; net short positions in the British pound increased by 24,725 shares to 113,684 shares, and the net short position in Australian dollars increased by 8,840 shares to 55,228 shares.
Among them, the New Zealand dollar position changed particularly significantly, and asset management institutions changed from the previous net long of 10,170 to a net short of 11,485. Additionally, net short positions in the Canadian dollar increased by 13,987 to 22,833, while net long in the Mexican peso decreased by 7,840 to 45,506 shares.