The joint intervention by the US and Japan in the yen has been effective, leading to a more than halving of short positions by hedge funds on the yen.

After the historic joint intervention actions by the United States and Japan, hedge funds have further reduced their bearish positions on the yen, indicating a moderation in negative market sentiment towards the currency. Data released last Friday by the U.S. Commodity Futures Trading Commission (CFTC) showed that as of the week ending August 11, the total number of short contracts held by leveraged funds decreased by 6.5% to 59,526 contracts. Overall, since the collaborative efforts of the authorities from both countries to support the yen around the end of July, hedge funds have cut their short positions on the yen by more than half. However, the yen still depreciated by about 1% this week, closing at 159.35 during Friday's New York session, giving back a considerable portion of the gains triggered by official interventions. This has kept market participants highly alert to the possibility of further interventions from Japanese authorities and a potential shift towards a hawkish policy by the Bank of Japan. "Given the previous large-scale shorting of the yen and the passive situation investors found themselves in, its natural for them to reduce their positions in light of rising risks," said Paresh Upadhyaya, a strategist at Pioneer Investments. CFTC data provides a snapshot of sentiment in the foreign exchange market, which has a daily trading volume of $9.5 trillion, revealing the positioning of hedge funds and asset management companies via derivatives. In terms of other currencies, hedge funds increased their bullish bets on the pound, pushing their long positions to the most optimistic level since February this year; short bets on the kiwi surged to the highest recorded level since CFTC data began in 2006; meanwhile, bullish sentiment towards the Mexican peso rose to its highest since June 2024. Overall, hedge funds, asset management companies, and other speculators have reduced their bullish positions on the dollar to approximately $36.8 billion. The following are the detailed positional changes for major currencies: Net position adjustments for leveraged funds are as follows: - Yen net shorts decreased by 4,107 contracts to 59,526 - Euro net shorts increased by 4,622 contracts to 77,671 - Pound net longs increased by 3,683 contracts to 42,722 - Aussie net longs increased by 7,737 contracts to 45,727 - Kiwi net shorts increased by 3,246 contracts to 34,031 - Canadian dollar net shorts decreased by 9,822 contracts to 92,487 - Swiss franc net shorts increased by 1,854 contracts to 14,061 - Mexican peso net longs increased by 8,568 contracts to 76,408 Net position adjustments for asset management companies are as follows: - Yen net shorts decreased by 18,530 contracts to 24,215 - Euro net longs increased by 9,607 contracts to 254,320 - Pound net shorts decreased by 7,307 contracts to 120,070 - Aussie net shorts increased by 7,754 contracts to 43,097 - Kiwi net shorts decreased by 4,730 contracts to 29,247 - Canadian dollar net shorts increased by 2,227 contracts to 104,250 - Swiss franc net shorts decreased by 1,445 contracts to 38,322 - Mexican peso net longs increased by 8,686 contracts to 34,186