Hedge Funds Resume Betting Against the Japanese Yen

Hedge funds have resumed betting against the Japanese yen, flipping back to a net short position after briefly turning bullish. Data from the Commodity Futures Trading Commission for the week ending September 29, 2026, shows leveraged funds held 77,429 long yen futures contracts and 91,590 short contracts, resulting in a net short position of 14,161 contracts. This marks a reversal from the previous two weeks when funds had increased their bullish yen exposure.

The latest week saw funds cut long positions by 15,494 contracts while adding 6,090 shorts. With each yen futures contract representing ¥12.5 million, the net short position amounts to roughly ¥177 billion. Bloomberg and Yonhap Infomax both noted the shift, describing speculative yen shorts as regaining dominance after three weeks of absence.

The repositioning follows the Bank of Japan's interest rate hike last month. Traders remain skeptical that the pace of tightening will sufficiently narrow the yield gap between the U.S. and Japan, which continues to favor holding dollars over yen and supports carry strategies. The current net short position is modest compared to earlier carry-trade cycles, reducing the immediate risk of a disorderly unwind.

However, the rapid flip from net long to net short in a single week highlights how quickly macro funds are trading around Bank of Japan communications and U.S. rate expectations. Investors with exposure to discretionary macro and systematic currency strategies should closely monitor how managers adjust yen risk around Bank of Japan meetings and potential Japanese authorities' intervention. While a renewed short-yen consensus can be profitable, crowded carry trades have historically reversed sharply when policy surprises occur.