Yen Strengthens as Speculators Unwind Positions Ahead of BoJ Rate Hike

The Australian and New Zealand Dollars are holding steady ahead of a crucial rate hike in Japan. The Bank of Japan is expected to raise its interest rates to 1.25% on Friday, which would be the highest since 1993.

Speculators have been betting against the Yen, but this trade has been unwinding rapidly. According to Commodity Futures Trading Commission (CFTC) data, large speculators went from being net short 92.2K Yen contracts in September to a net long of 10.8K just one week later.

The decision by the Bank of Japan will have significant implications for currency markets. A rate hike would make the Yen more expensive to borrow, which could lead to further losses for speculators who are short on the currency.