Hedging** pushed bearish yen bets to their highest level since April 2022 last week as speculation that the Bank of Japan is unlikely to turn hawkish heats up.
According to the latest data from the U.S. Commodity Futures Trading Commission, leveraged** net short yen contracts increased by 2,833 contracts to 65,611 contracts as of November 28. The Japanese yen touched 151 against the US dollar from 13 NovemberA recent low of 91 yen, which appreciated nearly 4%, rose to 146 on Monday23 yen, the highest level since mid-September this year.
Goldman Sachs strategists, including Kamakshya Trivedi, wrote on Friday: "As long as the U.S. appears to have achieved a soft landing and the Bank of Japan remains reluctant to signal an impending rate hike cycle, we will continue to see USDJPY** limits." ”
For this reason, we still believe that the strength of the yen is approaching its limit and should gradually fade. ”
The hedged** bet is a further indication that investors believe the yen's weakness is becoming more entrenched, even though the overnight index swap reflects that the Bank of Japan will end its negative interest rate policy by June. Japanese life insurers recently cut foreign exchange hedges by the most in more than a decade, suggesting that fears that the yen** could wipe out returns from overseas assets are fading.
Bank of Japan Governor Kazuo Ueda said last month that the BOJ would continue to patiently ease monetary policy to support Japan's domestic economy.