The joint intervention by the US and Japan on the yen has been effective, with hedge fund yen short positions dropping by more than half.

According to reports from Zhitong Finance APP, since the historic joint intervention by the United States and Japan, hedge funds have further reduced their bearish positions on the yen, indicating that the market’s negative sentiment toward the currency has eased somewhat.

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 yen contracts held by leveraged funds decreased by 6.5% to 59,526. Overall, since authorities from both countries intervened together at the end of July to support the yen, hedge funds have cut their short yen positions by more than half.

However, the yen still depreciated by about 1% this week, trading at 159.35 late Friday in New York, giving back a substantial portion of the gains prompted by official intervention. This has kept market participants highly vigilant regarding the possibility of another market intervention by Japanese authorities and a potential shift to a more hawkish stance by the Bank of Japan.

“As the market was previously heavily short on the yen and in a passive situation, facing rising risks, investors naturally reduced their positions,” said Pioneer Investments strategist Paresh Upadhyaya.

CFTC data provides investors with a snapshot of sentiment in the $9.5 trillion daily foreign exchange market, revealing the positions of hedge funds and asset managers established through derivatives.

In terms of other currencies, hedge funds have increased their bullish bets on the British pound, pushing their long pound positions to the most optimistic level since February this year; bearish bets on the New Zealand dollar have risen to the highest level since CFTC records began in 2006; meanwhile, the bullishness towards the Mexican peso has reached the highest level since June 2024.

Overall, hedge funds, asset managers, and other speculators have reduced their bullish positions on the U.S. dollar to about $36.8 billion.

The following are the detailed changes in positions for major currencies:

Leveraged fund net position adjustments are as follows:

- Net short yen positions decreased by 4,107 contracts to 59,526

- Net short euro positions increased by 4,622 contracts to 77,671

- Net long pound positions increased by 3,683 contracts to 42,722

- Net long Australian dollar positions increased by 7,737 contracts to 45,727

- Net short New Zealand dollar positions increased by 3,246 contracts to 34,031

- Net short Canadian dollar positions decreased by 9,822 contracts to 92,487

- Net short Swiss franc positions increased by 1,854 contracts to 14,061

- Net long Mexican peso positions increased by 8,568 contracts to 76,408

Asset manager net position adjustments are as follows:

- Net short yen positions decreased by 18,530 contracts to 24,215

- Net long euro positions increased by 9,607 contracts to 254,320

- Net short pound positions decreased by 7,307 contracts to 120,070

- Net short Australian dollar positions increased by 7,754 contracts to 43,097

- Net short New Zealand dollar positions decreased by 4,730 contracts to 29,247

- Net short Canadian dollar positions increased by 2,227 contracts to 104,250

- Net short Swiss franc positions decreased by 1,445 contracts to 38,322

- Net long Mexican peso positions increased by 8,686 contracts to 34,186