CFTC data shows hedge funds loaded up on yen shorts before the surge

Hedge funds placed a very large bet against the Japanese yen, and then the yen moved against them. CFTC data shows that leveraged funds accumulated net short positions of roughly 138,000 contracts in yen futures as of June 30, 2026, the highest reading since 2007. The yen then strengthened sharply, and a rapid unwind followed. How the trade got so large The logic behind shorting the yen was straightforward: Japan kept interest rates near zero while the US Federal Reserve held rates at significantly higher levels. Borrowing in a low-rate currency to invest in higher-yielding assets, the classic carry trade, made the yen a natural funding currency for global funds. The USD/JPY exchange rate reflected the pressure. The pair briefly surpassed 162, meaning the yen was at its weakest level against the dollar since 1986. The intervention that changed everything Japan’s Ministry of Finance moved aggressively. Coordinated intervention by the US and Japan in late July and early August 2026 knocked the trade sideways. Japan had already spent approximately 11.73 trillion yen, equivalent to roughly $72.7 billion, from late April through late May in earlier rounds of support for the currency. Th...