Hedge funds bet USD/JPY under 150 and put volumes surge
Hedge funds think the yen is set to get stronger, with many betting the dollar-yen rate will drop below 150 by year-end; some are even aiming for 140.
The hottest trade right now? Put options (basically, bets against the dollar) expiring in November at a strike price of 142.86.
By year-end, put volume was over triple call volume, showing stronger bearish demand in the options market.
Traders snap up USD/JPY 140 bets
The yen held its own last week, even after strong US jobs data, which has boosted investor confidence.
After some bold comments from Bank of Japan Governor Kazuo Ueda and board member Hajime Takata, the currency pair slid almost 5% and broke through a key support level at 155.
Now, traders see more room for the yen to rise and are snapping up longer-term downside bets targeting rates as low as 140.