Yen Short Bets Hit Nine-Year High As Carry Trade Revives

Speculators have rebuilt bearish yen positions to a nine-year high, with leveraged funds holding more than 115,000 short contracts as the currency trades near 160 per dollar. The article suggests the yen carry trade is regaining momentum because volatility remains subdued and the US-Japan rate gap still favors funding trades in yen. JPMorgan strategists note the market has already priced in potential Bank of Japan rate hikes and FX intervention, which may limit the immediate impact of such actions. However, intervention risk remains elevated given the yen’s weak level, and the piece warns that unexpected policy moves could still trigger a sharp short squeeze and spill over into global currencies and equities.