After a yen rally in early January, asset managers flipped to bullish from bearish. The currency dropped about 8 per cent in the following weeks. A similar shift happened in March.
An expected rally in the yen for 2023 never materialised. Instead, the currency flopped, but – after three years of declines – forecasters are again calling for a yen rally next year.
While the Bank of Japan has hinted it’s nearing the end for the world’s last negative interest rate regime, the central bank is keeping investors on edge by pushing back against bets for a near-term pivot and offering no clarity on the timing.
“The carry is just too expensive to hold yen long as an investment,” Mr Bechtel wrote.
Instead, if you are bullish on the yen he recommends shorting the Swiss franc against the Japanese currency as the pair touched the highest level in decades in the middle of November.
The yen lost roughly 8 per cent against the US dollar this year, making it the worst performer among its peers in the developed world.
Bloomberg
