Carry-Trade Investors Flock to China and Canada Currencies Amid Yen Strength
The Japanese yen's recent appreciation has investors searching for alternative currencies to fund their carry trades. The yen, the best-performing G10 currency, has risen around 6% against the dollar since late July, when authorities intervened in currency markets.
Speculators had previously flipped net long on the yen in the week to September 8, according to the Commodity Futures Trading Commission (CFTC). This shift was enormous, with net speculative positioning swinging from around 92,200 yen short positions to approximately 10,800 contracts.
Investors are now eyeing the currencies of China and Canada as potential replacements for the yen in carry trades. The yen's appreciation has made it less appealing for investors seeking high-yielding currencies to fund their trades.