Hedge funds’ net yen buying had narrowed by the end of September, but market participants point to information flows ahead of possible intervention by Japanese and US authorities as a factor that prevented a rebound around ¥159. This report examines the possibility that rate checks and leaks concerning President Trump’s concerns about yen depreciation were involved.
According to CFTC statistics showing hedge funds’ yen positions, net yen buying had narrowed to 70,000 contracts as of 22 September. Despite the decline from 120,000 contracts a week earlier, the reduction was not substantial given the dollar-yen exchange rate’s move back from the ¥152 range to the ¥159 range, suggesting that the valuation of net yen buying was likely limited from a breakeven perspective.
The 120-day moving average (120-day MA) has remained broadly around ¥159, suggesting that hedge funds’ net long yen positions avoided moving into losses. This is presumed to have been one reason the rebound in yen depreciation at ¥159 did not immediately collapse.
It has been suggested that the move by Japanese authorities to conduct a “rate check,” along with the disclosure that President Trump had conveyed concerns about yen depreciation at the 22 September Japan-US leaders’ summit, may have affected the halt at ¥159. Some believe these developments took the form of information leaks intended to contain dollar strength and yen weakness at ¥159.
The article identifies hedge funds’ motive for preventing the dollar from reaching ¥159 as avoiding losses on their long yen positions, and suggests that comments by US Treasury Secretary Bessent may also have been related. It also presents the view that Secretary Bessent’s background may be connected to hedge fund strategies.