I mentioned last week that sharp declines in open interest in yen futures
contracts occurring amid rising prices almost certainly meant that short
sellers in the yen were covering their short yen positions in large numbers.
New data released late Friday by the Commodity Futures Trading Commission back
this up.
In the week ended March 6, large speculators reduced their
collective net short position in the yen almost in half by 52k contracts to
62,886. The current position is now significantly below the peak of 173,005
contracts in the week ended January 30. With the short base now significantly
reduced and with the wide interest rate differential between Japan and the rest
of the world still large enough to encourage positioning for the yen carry
trade, it is not surprising that the yen began to weaken again at the end of
last week.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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