Hedge funds reduce bearish bets against yen after US-Japan intervention

When two of the world’s largest economies team up to tell currency speculators to knock it off, speculators tend to listen. Hedge funds have dramatically unwound their bearish bets against the Japanese yen following a historic joint intervention by US and Japanese authorities, cutting net short positions by more than half in just five weeks. Leveraged funds slashed their net short positions in yen futures and options from nearly 138,000 contracts at the end of June to roughly 63,600 contracts by August 4. That 74,440-contract reduction represents one of the sharpest decreases in yen short positioning since the 2008 financial crisis. By the days following, the figure had dropped further to around 59,526 contracts. The intervention that spooked the shorts Japan purchased an estimated $75 to $85 billion worth of yen over two days in late July and early August, the most sizable intervention since 2011. The trigger was straightforward: the yen had been hovering near 40-year lows against the US dollar, at levels not seen since the mid-1980s. What made this particular move different from Japan’s past solo efforts was the explicit backing from Washington. Treasury Secretary Scott Bessent p...