Big yen short in doubt as Tokyo piles in

A significant split seems to be forming between a growing number of bearish yen watchers in Tokyo and their more positive foreign counterparts.

Those in Japan suggest there’s still plenty of time to pile on shorts after the Yen’s falling to a 24-year low. According to analysts from Sydney to Geneva who say time is nearly up on the trade as the yen slips further toward the key psychological level of 140 per dollar.

The path of the yen is being closely-watched by all financial markets, with bets on a further decline increasingly seen as the most stretched macro trade, according to a recent Bank of America survey of fund managers.

Japan’s interest-rate gap with the rest of the world, higher oil prices in the import-dependent nation and the resurgent greenback have already pushed the currency 17% lower for the year – the worst performer among Group-of-10 peers.

A weaker yen is inevitable as the BoJ continues with easy monetary policy. There will be room for a little more upside for dollar-yen if interest rates rise in the US, with 147 a possibility.