Huge Bets Building Against JPY

The big moves in yen crosses and other parts of markets last week left a lot for traders to digest. On the week, the Swiss franc was the top performer while the Australian dollar lagged. The new week begins with comments from Kuroda. 

Consider the following as trading gets underway:

• The S&P 500 has gained for 7 consecutive weeks and closed at a record 1804 on Friday
• GBP/JPY opens the week near a four-year high
• GBP/USD posted the highest weekly close in 19 months on Friday
• EUR/JPY opens near a four-year high
• USD/JPY opens near the highest since July

Technically, the yen crosses have broadly broken out but the froth in the equity markets is a worry. This is essentially a three-day week in the US with the Thanksgiving holiday on Friday. The highlights are jobless claims and durable goods orders reports on Wednesday.

To start the week, the ECB's Noyer and BOJ leader Kuroda appear at an event together in Tokyo at 0400 GMT.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR +9K vs +17K prior JPY -112K vs -95K prior GBP -2K vs -10K prior AUD -36K vs -36K prior CAD -16K vs -16K prior NZD +12K vs +10K prior CHF +3K vs +3K prior US Dollar Index longs at 15K vs 14K prior

What jumps out is yen positioning as bets against the Japanese currency grow to the largest in six years. That kind of extreme highlights the risks of the kind of sharp corrections we saw in EUR/JPY last week. Then again, even the un-taper in September did little to deter bets against the yen at the time.