Speculators Mount Record Bet on Rising Japanese Yen, Eyeing Further Rate Hikes
Speculators have mounted their biggest ever wager that the Japanese yen will continue to rise as they position for further Bank of Japan interest rate hikes, an abrupt reversal from huge bets against the currency last year. The yen has strengthened by 4% this year as stronger inflation data has pointed to more rate hikes, calling into question the once hugely popular yen carry trade. Growing expectations that the Bank of Japan will keep hiking interest rates have been boosted by stronger-than-expected inflation data and comments from BOJ officials.
- The shift in sentiment highlights the evolving nature of currency markets, where changing economic conditions can quickly upend prevailing narratives.
- Will these unprecedented levels of speculation lead to a self-reinforcing cycle, where the market's collective expectation drives further price movements?