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Foreign Exchange

IMM: Yen longs rise to 5-month high as anxiety mounts

Speculators on the CME more than doubled their long JPY positions as concerns over the global economy sparked haven demand for the Japanese currency.

The latest Commitment of Traders report, issued by the Commodity Future Trading Commission, shows net long JPY positions rose from 11,100 contracts to 25,100 contracts in the week to July 24. That took the net value of the bets on further gains in the JPY to $4 billion, the highest level since February. That represents a turnaround for JPY as the market has moved to price in further easing from central banks in the US and Europe as the global economy stutters.

Indeed, just a month ago, speculators on the CME were net short of JPY.

 JPY longs at five-month high

 

The move in speculative JPY positioning and the shift to price in further monetary accommodation outside Japan is likely to alarm Japanese officials, who have increased their attempts at verbal intervention to rein in JPY strength in recent weeks.

The other big move of the week on the CME saw speculators trim their net short positions in EUR.

That shift came ahead of last week’s pledge by Mario Draghi, president of the European Central Bank, to do whatever it took to save the single currency. That suggests speculative players were moving in the right direction ahead of the more than three cent rally in EURUSD from the July 24 low.

The value of investors’ bets against the EUR fell by $2.3 billion to $23.3 billion. Although that is smaller than the record position seen in June, it remains elevated, suggesting that short-covering of such a one-sided position will help stem any EUR decline.

 EUR short positions trimmed back

 
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