BOJ Dovish Surprise Leaves Yen Bulls Bruised

Despite futures traders piling back into longs for the Japanese yen ahead of the Bank of Japan meeting, the currency's bulls were left bruised after USD/JPY pushed higher following a slightly dovish hike.

The large speculator position in USD/JPY rose to a record high, with 59k contracts added at their fastest weekly pace on record. Combined with asset managers, whose gross longs rose by 41.3k contracts (53.2%), total bullish exposure increased by just over 100k contracts.

While traders were betting on a more hawkish BOJ meeting, it may still turn out to have been the correct move, even if ill-timed. USD/JPY has risen 3.4% in 10 days since the latest MOF intervention, and after testing 158 on Friday, traders may be prudent to remain on standby for further action from Japanese authorities.