Japanese retail traders increased short dollar positions last month to highest level since 2008
Japanese retail traders turned bearish on the dollar last month to the most bearish level in nearly two decades amid speculation that official intervention could weaken the greenback against the yen. Traders' net short dollar position more than quadrupled from the previous month to 2.79 trillion yen ($17.2 billion), according to data from the Japan Financial Futures Association. This is the largest dollar short position since records began in late 2008. While these bearish bets could also be USD against other currencies, the large amount of open interest in JPY suggests these positions are primarily USD/JPY. Retail traders dominate spot trading in Tokyo and their stance could help determine whether government intervention will be effective in supporting the yen. The Japanese yen has been one of the worst-performing G10 currencies this year. Since these traders have already built large positions in preparation for a weaker dollar, this may mean that official selling of USD/JPY will be less effective than expected.