Yen Speculators Turn Bullish as BOJ Rate Hike Expectations Rise

Speculators have turned net long on the Japanese yen for the first time since February, signaling growing bullish momentum after the currency rallied due to expectations of faster Bank of Japan rate hikes.

A Reuters report noted that commodity futures trading commission (CFTC) data showed a sharp reversal from net short positions to net long positions in yen futures. The data revealed that non-commercial positions in yen futures reached 10,796 long contracts in the week through September 8.

This marked a significant turnaround from net short positions of 92,227 contracts a week earlier and represented the first overall net long position since February 24. The shift comes after the yen strengthened sharply this month, supported by expectations that the Bank of Japan could accelerate its rate-hike schedule and speculation that Japanese investors may repatriate assets held overseas.

The yen reached 152.89 against the U.S. dollar on September 8, its strongest level since February 17. The latest rally follows years of weakness for the Japanese currency, which accelerated after fiscal dove Sanae Takaichi became prime minister last October and concerns that the BOJ was falling behind other central banks in tightening monetary policy.