Dovish BOJ Intervention Risk Sends Yen Bulls Reeling
Investors who bet on a strengthening Japanese yen have seen their positions bruised by the Bank of Japan's slightly dovish interest rate hike. Despite piling into longs at record rates, USD/JPY has risen to test 158 after the latest MOF intervention. Traders may now be waiting for further action from authorities.
Futures traders had anticipated a more hawkish BOJ meeting, which would have boosted the yen. However, the outcome may still prove them right as the Japanese currency continues to face potential intervention.
The US dollar has seen its net-long exposure decline by $13.3 billion in one week, marking the fastest reduction in six years. Despite this, the US dollar index enjoyed a seven-day high after a slightly hawkish FOMC meeting and stronger retail sales.