Hedge Funds Are Bullish on Yen for First Time Since October 2012

  • Speculators have net-long position on Japan's currency futures
  • Yen gained 2.5% this week as China rout spurred haven demand

Hedge funds and other large speculators are bullish on the yen for the first time in more than three years.

Positions that profit from yen gains against the dollar outnumbered bearish positions by a net 4,103 contracts in the week to Jan. 5, according to data from the U.S. Commodity Futures Trading Commission. That’s the first time since October 2012 the data haven’t shown net short positions.

"Dollar-yen has plunged on yen safe haven flows in the midst of turmoil in the global equity markets, and could fall further if China’s financial/economic woes continue to weigh on the markets," said Matt Weller, an analyst at Gain Capital Holdings Inc.’s Forex.com unit in Grand Rapids, Michigan.

The yen surged at the start of this year as investors sought safe assets while concern about Chinese economic growth roiled global financial markets. The Japanese currency has fallen for the past four years as policy makers carried out unprecedented stimulus to spur inflation.

Japan’s currency had its biggest weekly surge since September against both the dollar and euro. The yen advanced 2.5 percent this week to 117.49 per dollar and gained 2.1 percent to 128.38 per euro.

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