Investors Turn Against Yen as It Continues to Fall

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For the first time after late May, the tentative investors have moved against the yen, according to US government data.

The investors held on to net short yen positions that would be beneficial if the yen declined against the dollar, summing USD 2.8 billion as of October 23rd, as per the weekly report of Commodity Futures Trading Commission on the traders’ commitment. After May 29th, it was the first time that most of the bets in futures market supported a decline in the yen.

This month, the yen has fallen 2.1 percent against the dollar as anticipations increase that the Bank of Japan will relieve the financial policy at its upcoming Tuesday’s policy meeting. On Thursday, the dollar increased to Y80.38, a 4-month high against yen and was at Y79.59 recently.

A chief foreign exchange strategist working at Toronto-based Scotia Capital, Camilla Sutton said that the market was highly centered on the risk of Bank of Japan expanding its asset-buying program.

The anti-yen bets also step in as political demands build for Bank of Japan to motivate the market with more financial easing. At the previous meeting of the bank, it enhanced the size of its asset-buying program by Y10 trillion.

All ten experts from the bank who were assessed by Dow Jones Newswires during this week anticipate the central bank to enhance its easing program for the coming week.

On Monday, the 3rd successive trade deficit of Japan was reported, which was hurt by the nation’s territorial quarrel with China over the islands in East China Sea. The exports to China declined 14.1 percent when compared to a year before. On the same day, the Bank of Japan downgraded its financial stance for 8 out of the 9 regions in Japan.

The unsatisfactory economic data from Japan is in contrast to the latest improvement in United States. The 3rd quarter gross domestic product in United States topped predictions, increasing 2.0 percent. The economist had predicted 1.8% growth during the quarter.

The weekly report of CFTC indicates the positions of speculative investors in major currencies against the dollar, keeping a track of the speculators’ movements on Chicago Mercantile Exchange.  Even though this is just a small fraction of the worldwide currency markets, the position of these investors are known to be indicators of trading of hedge funds.

On the whole, investors had a net-short dollar point against other main currencies. But that point was down 44 percent to USD5.3 billion from the last week.

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