Contrarian bears bet against yen as hedge funds pare shorts

20.04.2017 / 10:41

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Investors have been flocking to the safety of the yen as a standoff over North Korea’s nuclear program and uncertainty over the outcome of France’s election keep them on edge. Yet some are using this as an opportunity to sell Japan’s currency.

UBS this week lowered its 12-month forecast for the yen to 110 per dollar from 105, and said several new developments have led it to trim the potential for any longer-term rebound in the currency.

Analysts surveyed by Bloomberg predict the yen will weaken to 116 per dollar by year-end, as recently as last October they were forecasting it would end 2017 at 105. Options traders have trimmed bullish positions in the currency since the end of February, three-month risk reversals show.

Others are relying on technical levels to gauge the sustainability of the yen’s gains before deciding on their next move.

A close in the dollar-yen below its 200-day moving average will fuel further selling of the U.S. currency, said James Athey, a money manager at Aberdeen Asset Management Plc in London.

Source: Bloomberg

Junior Trader Ivan Ivanov

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Contrarian bears bet against yen as hedge funds pare shorts

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