The yen continues to be driven lower by Japan’s fundamentals. And unlike in previous periods, the yen has often declined recently even when the S&P500 was lower. JPY is losing its status of a safe haven currency (see discussion). Yes, this seems to be a difficult concept for some FX traders, but that has been the reality for now. There are just too many fundamental risks to be long the yen these days (see discussion).
|USD/JPY over the past month (source: Forexpros)|
And traders in fact have turned increasingly short the yen as seen from the speculative exposures in the futures markets.
NASDAQ: – The net amount of investor cash betting the yen would fall more than doubled in the past week, government data showed Friday.
As of Oct. 30, investors had increased their net short yen position to $5.8 billion, the largest short yen position since May 8. The previous week investors held a net $2.8 billion short yen position, according to the Commodity Futures Trading Commission.
Here is the latest from the CFTC.
Liquidity moves markets!Click here to learn how you can follow the money.
|Net non-commercial positions in yen (Source: CFTC)|
The GS JPY Sentiment Index has turned lower as well based on the changes in net positions.
Goldman: – After switching to net short JPY positioning last week, JPY net speculative positioning continued to move further into short territory in this week’s COT report. Net positioning now stands at -$5.8 bn, with most of the change coming from an increase of speculative short positioning in the currency. Our JPY Sentiment Index fell by another 14.8 points on the week, and is now at 24.0, the lowest reading of all eight currencies covered in the report.
Of course at some point one would need to put on a contrarian hat and ask the question if the yen is oversold. For now however taking a contrarian view on JPY may be premature.
Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases promotional consideration is paid on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. The Wall Street Examiner makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.