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Yen speculators must have hurt last week

Posted by WorldWideMarkets . on May 27, 2013 4:56:00 AM

Yen speculatorsOuch! Speculators increased their bets on a weaker yen to the most since July 2007 by one measure using CFTC data. Of course that was before the sudden pop in the yen on Thursday and Friday on currency trading platforms evertywhere. The impetus was anticipation of an end to the Fed’s QE program or at least a slowdown, something that still holds. But investors got nervous Thursday and with the decline in Japanese stocks and concerns on Japanese yields more than several people were caught on the wrong side of the trade. Net shorts were 95,186 contracts on May 21 versus 88,407 the week before.
Of course, the high net short position may also explain some of the yen’s pop at week’s end as those same investors had to buy to reduce losses. But the data is old and longer term, while some shorts were undoubtedly hurt, the anticipation that the Fed is going to wind down its stimulus still holds.
 Net dollar long position was around $34 billion on Tuesday, implying the specs were still betting on the end or slowdown in QE as well. By some counts that continues the trend of a largest net long dollar position in a year. Expect adjustments this week.
 Net short positions, or bets against the pound, increased. One outlet saying by the most since 1992. But unless your sole focus is the pound more interesting is that net euro short positions on a dollar basis widened and are the largest short against the dollar, higher even than short positions on the yen on a dollar basis.
Watch Japanese exporters and corporate interests for clues

 

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