Courtesy of Mish.
Sudden Belief in Abenomics
Traders are increasingly betting that Japanese prime minister Shinz? Abe will not follow through on his plans to do whatever it takes to defeat deflation in Japan (or that he has already done enough and won’t do any more).
Bets on Yen Hit Three-Year High
Currency futures show Bets on Yen Strength Climb to Three-Year High.
Bets the yen will strengthen climbed to the highest level in three years as concern global growth is slowing spurred demand for the relative safety of Japan’s currency.
Hedge funds and other large speculators boosted net long positions on the yen to 25,266 contracts in the week through Jan. 12, the most since October 2012, based on futures. Japan’s currency rose to the strongest since August versus the dollar last week as a slump in stocks around the world and signs China’s economy is losing momentum pushed back expectations for the Federal Reserve’s next interest-rate increase.
“I can’t see the exit from this tendency toward risk aversion,” Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., a margin-trading services provider, wrote in a note to clients. “The drop in stocks and yen currency crosses will continue to weigh on dollar-yen.”
US Dollar / Yen Monthly
Switch in Sentiment
At the start of 2012 the Yen traded at 76.23 to the dollar. It’s now at 117.48 to the dollar. That’s a decline of 35%.
In May, the Yen hit a low of 125.86 to the dollar. Since then, sentiment on the Yen switched wildly as shown by currency bets.
Here’s why….
