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Asset Managers Most Bullish on Yen Since 2021 on BOJ Hike Bets
trade ideas :: 2025-02-17 :: source - bloomberg
By Mia Glass
Japanese Yen / Bloomberg
(Bloomberg) -- Institutional investors turned the most positive on the yen since March 2021 as speculation mounts that the Bank of Japan will raise interest rates again.
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Asset managers’ net long positions for the yen reached the highest in about four years, according to Commodity Futures Trading Commission data covering the week ended Feb. 11. The figures emerge as overnight index swaps show a more than 80% chance of a rate hike by the BOJ by July, with a certainty priced in by September. The Japanese currency has gained 0.2% to 152.06 per dollar at 9:29 a.m. in Tokyo.
Earlier this month, the BOJ’s most hawkish board member Naoki Tamura flagged the need for two or more interest rate hikes by early next year, and nominal wages in December also jumped by the most in nearly three decades. In the US, retail sales fell in January, reviving bets on Federal Reserve rate cuts and pointing to a further narrowing of the yield gap between the US and Japan.
“Asset managers started to think the BOJ’s hiking appetite is stronger than initially thought,” said Shoki Omori, chief global desk strategist at Mizuho Securities Co. in Tokyo. “Many expected a terminal rate of 1%, but people started to fear rates expectations going higher than 1% more quickly than expected.”
The yen has been the best performer against the dollar this year among its Group-of-10 peers, a contrast to its consecutive declines over the past four years. Still, the yen faces headwinds from Japan’s retail investors who are hungry for overseas stocks, as well as the nation’s negative real interest rates.
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