Hedge funds have shifted to a bullish position on the Japanese yen for the first time since July 2025, marking a notable reversal in sentiment just weeks after US and Japanese authorities intervened to support the currency. Data from the Commodity Futures Trading Commission released on Friday showed that leveraged traders cleared their short yen bets during the week ending September 15 and began building bullish positions instead.
According to aggregated data compiled by Bloomberg, these funds now hold approximately 251 billion yen ($1.6 billion) in bullish yen-related positions. This shift toward a more favorable outlook for the yen comes right before this week's interest rate decisions from the Federal Reserve and the Bank of Japan, adding another layer of significance to the move.
Some market participants had previously hoped the Bank of Japan would deliver stronger signals about further rate hikes, but Japanese policymakers failed to meet those expectations. As a result, these newly established bullish positions could catch some traders off guard if the central bank's stance remains unchanged. The yen slipped as much as 1.3% on Friday before paring losses, trading at around 156.80 per dollar in New York late in the session.
The Nikkei reported that the Bank of Japan has been asking market participants about exchange rate levels, a step typically viewed as a precursor to formal intervention. This development adds to the complexity of the current market landscape and underscores the heightened attention being paid to currency movements.
The CFTC data offers investors a glimpse into sentiment within the foreign exchange market, which sees daily trading volumes reaching $9.5 trillion. It reflects how hedge funds and asset managers are positioning themselves through derivatives. Meanwhile, as of September 15, speculative traders, including asset managers and non-commercial participants, have reduced their dollar bullish bets to the lowest level since March. The dollar still managed to post its largest weekly gain in three months this week.