Stock market today: Dow falls slightly as investors seek guidance after turbulent week
A group of trend-following investors active in the futures markets have reduced their bets against the Japanese yen by the most in years, according to the latest data from the Commodity Futures Trading Commission.
Leveraged funds reduced a net short position in futures contracts on the Japanese currency by more than 46,000 contracts, or 65 percent of the previous week’s amount, in the week ended Aug. 6, according to weekly data from the CFTC released Friday.
The decline – likely triggered by the unwinding of the yen carry trade that caused the yen to appreciate rapidly last week and sent a shockwave through global markets – was the sharpest in at least a decade, according to CFTC data compiled by FactSet.
On Tuesday, the day after the yen’s big move on August 5, these traders were sitting on a net short position of about 24,000 contracts, the smallest since February 2023, according to the latest data.
The week-to-week decline was the biggest in at least a decade, according to CFTC data compiled by FactSet. Each contract is worth 12.5 million yen. At Monday’s exchange rate of about 147.5 yen per dollar, the position was worth about $2.1 billion.
The leveraged fund category consists mostly of commodity trading advisors (CTAs), a type of speculative fund that typically uses trend-following strategies to place bets on financial markets using futures contracts. Brad Bechtel, global head of foreign exchange at Jefferies, told MarketWatch last week that these positions represented only a tiny fraction of the bets against the yen. But the magnitude of the change could provide insight into the extent of the carry trade unwinding.
