Currency speculators in International Monetary Market futures in the week ending July 18 aggressively increased their bets that the Japanese yen will weaken, data released on Friday showed.
Net short yen positions were increased to 69,049 contracts, the largest net short position in five months, from 20,704 contracts the week before, data from the Commodity Futures Trading Commission show.
The hefty increase reflected the currency market's view that the Bank of Japan's landmark interest rate increase a week ago is unlikely to be repeated any time soon.
The BoJ raised interest rates to 0.25 percent from virtually zero on July 14, its first rate hikes in almost six years. But the yen subsequently weakened, falling to a three-month low against the dollar and a record low against the euro this week. It only started to recover some of that lost ground on Friday.
The increase in yen short positions on the IMM was the main factor behind the fall in the overall net short US dollar position to 21,804 contracts from 92,238 contracts the week before, according to Reuters calculations. That is the net US dollar position on the IMM against the euro, yen, sterling, Swiss franc and Australian and Canadian dollars.
The net long euro position was cut back to 51,694 contracts from 77,895 contracts. That was the smallest net long position in three months. Elsewhere, IMM traders opened up a net long position in the Mexican peso for the first time in almost four months. Being "long" a currency is effectively a bet it will strengthen, while being "short" is a bet it will weaken.
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