Yen Short Bets Hit Nine-Year High as Carry Trade Revives Ahead of BOJ/Fed Week

Leveraged funds' yen short positions rose to their highest level in nine years — over 115,000 contracts in the week through June 9 — as traders re-established yen-funded carry trades betting the currency will keep weakening even as the BOJ prepares to hike. The build-up revives concern about a repeat of the August 5, 2024 'Black Monday II' unwind, in which a BOJ hike combined with weak US data triggered a same-day 12% Nikkei collapse as $4 trillion in yen-funded carry positions were closed simultaneously. The position build comes just one day before the BOJ's June 16 decision and the start of Warsh's first FOMC meeting.