According to data released by the U.S. Commodity Futures Trading Commission (CFTC) on Friday, leveraged funds held net long positions in the Japanese yen worth approximately 55.9 billion yen (about $355 million) in the week ending September 22, a sharp decline of nearly 80% from the previous week.
This shift in positioning is particularly notable because just one week earlier, hedge funds had turned net bullish on the yen for the first time since mid-2025. Within just one week, traders rapidly withdrew most of their bullish bets, indicating that the Bank of Japan's latest policy signals failed to meet market expectations for further monetary tightening.
The Bank of Japan raised interest rates on September 17 as expected, but its policy statement did not demonstrate the hawkishness traders had anticipated, nor did it make any clear commitment to further rate hikes. As a result, the yen weakened afterward.
CFTC data shows that in the week ending September 22, leveraged funds cut their net long yen positions by 15,597 contracts, leaving only 4,472 contracts. In value terms, their bullish yen positions plummeted nearly 80% from the previous week to 55.9 billion yen.
The still-large interest rate differential between Japan and the United States is also a significant factor weighing on the yen. Meanwhile, Japanese markets were closed for a public holiday earlier in the week, which somewhat reduced trading activity in the local market.
However, the yen staged a notable rebound on Friday, rising as much as 1.2% to 156.94 per dollar. Earlier, Japanese officials met with U.S. officials to discuss the problems caused by the yen's weakness, and related remarks renewed market attention on exchange rate policy.
In sharp contrast to the rapid retreat of yen longs, speculative sentiment toward the dollar strengthened markedly. In the week ending September 22, speculative funds including asset managers and non-commercial traders more than tripled their net bullish dollar positions compared to the previous period. At the same time, the dollar had just recorded its strongest two-week rally in six months.
The dollar's strength is closely related to recent changes in Federal Reserve policy expectations. Compared to the Bank of Japan's cautious stance on further rate hikes, the large interest rate differential between the U.S. and Japan continues to support the dollar and has diminished the appeal of betting on yen appreciation.
CFTC data also shows that leveraged funds not only reduced yen longs but also adopted a more cautious attitude toward multiple major non-dollar currencies overall. In the week ending September 22, leveraged funds increased euro net shorts by 7,450 to 58,805 contracts; reduced sterling net longs by 12,179 to 6,519 contracts; and cut Australian dollar net longs by 3,615 to 55,684 contracts.
Meanwhile, New Zealand dollar net shorts increased by 2,897 to 5,216 contracts, Canadian dollar net shorts rose by 7,719 to 49,123 contracts, and Swiss franc net shorts increased by 1,956 to 18,620 contracts. Mexican peso net longs decreased by 10,865 to 79,260 contracts.
Asset managers showed similar trends. Their yen net longs fell by 12,323 to 42,498 contracts, and euro net longs decreased by 30,892 to 244,673 contracts; sterling net shorts increased by 24,725 to 113,684 contracts, and Australian dollar net shorts rose by 8,840 to 55,228 contracts.
Among these, the change in New Zealand dollar positioning was particularly notable, with asset managers shifting from a net long of 10,170 contracts to a net short of 11,485 contracts. Additionally, Canadian dollar net shorts increased by 13,987 to 22,833 contracts, while Mexican peso net longs decreased by 7,840 to 45,506 contracts.
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