That giant sucking sound you hear is the P&L of macro/FX hedge funds as they look in dismay at their USDJPY exposure. Why? Because as the following chart from SocGen shows, net spec positioning in the JPY was has quietly risen to the highest it has been since 2012!
This what SocGen’s Kit Juckes said just last night:
USD/JPY hasn’t fallen as much as a blind correlations with equities might suggest. Or, if the causation goes the other way, the Nikkei is doing worse than it really ought to on the back of the move in USD/JPY to date. In part that reflects (probably prematurely) concern about the BoJ acting to stop the yen rallying further. It also reflects the shift in positioning. The market is turning net long yen, though I don’t think that is reflected in a short USD/JPY position as much as shorts in AUD/JPY, NZD/JPY. GBP/JPY and even EUR/JPY (Chart 2).
Well, Kit didn’t have much to wait: after last night’s NIRP shocker by the BOJ, explicitly denied by Kuroda just one week earlier, the USDJPY is soaring…
… and all those hedge funds who moved to long yen positions in recent months are getting a quick refresher in the lesson of “don’t fight the Bank of Japan”, even when it is sprawled out and about to lose all credibility.
via Zero Hedge http://ift.tt/1Sg5Me4 Tyler Durden