Yen's Rise Sparks Carry-Trade Shift to China and Canada

The Japanese yen has appreciated around 6% against the dollar since late July, when authorities intervened in currency markets. According to LSEG data, this move has carry-trade seekers looking elsewhere for funding opportunities.

Investors are eyeing the currencies of China and Canada as potential replacements. This shift is due to speculators flipping net long on the yen in the week ending September 8, according to the Commodity Futures Trading Commission. The total number of contracts was around 10,800, compared to approximately 92,200 short positions the previous week.

Hawkish commentary from Bank of Japan board members has likely contributed to the yen's appreciation.