In the New York market, there is a growing shift in the funding currency for carry trades from the yen to the Swiss franc. USD/JPY is trading in the low 159s.
Late in New York trading, USD/JPY was trading in the low 159s, as the market showed signs of a shift in the funding currency for carry trades from the yen to the Swiss franc. The shift is reportedly being driven by coordinated intervention by the US and Japanese authorities to correct yen weakness, as well as rising interest rates in Japan, which are reducing the relative appeal of yen carry trades.
According to the latest data from the Commodity Futures Trading Commission, funds increased their net short Swiss franc positions to around a two-month high in the week through 11 August, while net short yen positions narrowed for the second consecutive week. The situation is reportedly being attributed to Switzerland's policy rate being near zero and views that the Swiss National Bank also wants to contain franc appreciation.
While some analysts point out that this trend could weaken pressure for yen depreciation over the long term, moves to reverse the yen's recent appreciation remain strong for now, and USD/JPY has returned to the 159 level.
USD/JPY is currently reported at 159.15, while the franc is around 0.8008 against the dollar. The market is closely watching the shift in the funding currency for carry trades.