Little wonder, perhaps, that the yen remains under heavy selling pressure. While the dollar is struggling against a major currencies on an index basis, it is pushing new highs for the year against the yen just under 151.00 yen.
U.S. Commodity Futures Trading Commission data show that speculators increased their net short yen position – effectively a bet that the currency will depreciate – to the largest since November and the second biggest in six years.
There are reasons to believe Japanese authorities may be less willing to conduct yen-buying intervention to support the currency like they did in 2022, but stretched positioning among hedge funds and speculators will almost certainly be a red flag.
FX traders don’t seem to be too concerned though – three-month dollar/yen implied volatility is its lowest in almost two years.
In China, meanwhile, official figures on Monday showed that Chinese banks purchased the most dollars from their clients via FX swaps in January, suggesting exporters preferred to only temporarily acquire the local currency while holding on to dollars.
State media also reported that President Xi Jinping held a meeting of a key economic policy body on Friday, the Central Financial and Economic Affairs Commission, to discuss providing support to manufacturers and lowering logistics costs.
