Australian Pension Fund Bets Big on Yen Despite Record Low

Australian Retirement Trust (ART) has built its largest yen overweight position in years by cutting exposure to the US dollar.

The A$370 billion pension fund added to its trade as the yen weakened towards 160 per US dollar, a rare bullish call on the currency at a time when many investors are selling it.

Jimmy Louca, senior portfolio manager at ART, told Bloomberg that the market has only partly priced in the impact of higher energy prices on the yen, and expects the Bank of Japan to raise rates sooner than expected.

Louca believes a reversion in these factors should support the yen, with swaps pricing in an 80 percent chance of a BOJ rate hike in September and fully pricing it by October.