Speculators Bet Big on Yen, Favouring Rate Hike Expectations

Speculators have turned bullish on the yen for the first time since February, signaling growing momentum in favor of the Japanese currency. According to data released by the Commodity Futures Trading Commission (CFTC), net non-commercial positions in the yen reached a significant milestone: 10,796 long contracts as of September 8.

This marks a sharp reversal from just one week earlier, when speculators were betting on further yen weakness with a net short position of 92,227 contracts. The shift comes after the yen strengthened this month, supported by expectations that the Bank of Japan (BOJ) could accelerate its rate-hike schedule and speculation about Japanese investors repatriating assets held overseas.

The latest rally follows years of weakness for the yen, which accelerated in October last year when fiscal dove Sanae Takaichi became prime minister. The currency's decline was also fueled by concerns that the BOJ was falling behind other central banks in tightening monetary policy.