The yen extends a rally to a five-week high on Monday as speculation that the Federal Reserve is nearing the end of policy tightening drives the dollar lower. Japanese government bonds are mixed amid caution toward Tuesday's 20-year debt auction.
USD/JPY drops as much as 0.6% to 148.70, the lowest since Oct. 11, in its third-day decline.
Both leveraged funds and asset managers increased bearish yen bets in the week ended Nov. 14, according to the latest data from the Commodity Futures Trading Commission.
However, the turn in US economic data remains gradual, and the carry in USD/JPY long positions remains in the vicinity of 600bps.
It will likely take a more significant turn in the US data, more significant financial market turmoil akin to March 2023, or an acknowledgment from the Fed that cuts are indeed coming, for USD/JPY to sustainably move lower.
Source: Bloomberg
