As dollar-yen swings sharply in the foreign exchange market, Japanese retail FX investors are increasingly inclined to sell into rallies. According to data from Gaitame.com’s trading service “Gaika Next Neo,” dollar-yen sell positions increased 17.7% day-over-day between September 10 and 11, making retail investors’ bearish bias unmistakable.
The backdrop is a market environment where surging oil prices are prompting dollar-buying and yen-selling, while expectations of additional Bank of Japan rate hikes are being viewed as a yen-supporting factor, making it difficult to chase upside. With the U.S. Consumer Price Index (CPI) release scheduled for September 11, investors unable to determine market direction appear to have leaned toward adjustment selling.
Dollar-yen pushed up by oil spike, then pulled back after ECB meeting
During European trading hours on September 10, reports that Yemen’s Iran-backed Houthi forces had seized the strategic western port city of Mokha, combined with expectations that Saudi Arabia’s crude oil production would see its sharpest decline since 1990, sent oil prices soaring. This triggered yen-selling and dollar-buying, pushing dollar-yen up to 154.666 yen.
However, when the European Central Bank (ECB) subsequently held its regular policy meeting and delivered a rate hike in line with market expectations, the statement was broadly interpreted as hawkish, strengthening euro-buying and dollar-selling flows. Dollar-yen was pushed back down to around 153.85 yen.
Even as Asian trading began on September 11, the dollar-strength and yen-weakness trend driven by high oil prices persisted, with dollar-yen bought back up to 154.610 yen in early trading. However, adjustment selling intensified as investors sought to gauge the outcome of the U.S. CPI release, pushing the pair down to around 153.05 yen.
Trading volume down 15% from prior day, positioning tilts toward selling
Trading volume on Gaika Next Neo remains 24% above the 20-day average, indicating that overall market activity remains robust. However, volume declined 15.0% from the previous day, suggesting that trading is settling down ahead of the CPI release.
Looking at the composition of open positions, buy positions still account for 61% of the total, maintaining a buy-dominant stance, but sell positions increased 5.2% day-over-day. This suggests that more investors are taking profits or selling into rallies during dollar-yen’s upward moves.
Currency pair share: Mexican peso-yen and GBP/JPY expand
In terms of market share by currency pair, dollar-yen maintains its overwhelming presence at 87.0%. While this represents a 0.5 percentage point decline from the previous day, it remains the undisputed center of retail investor trading.
Notably, Mexican peso-yen rose 0.5 percentage points to 3.2%, GBP/JPY gained 0.4 percentage points to 1.3%, and NZ dollar-yen increased 0.3 percentage points to 1.0% — all expanding their share. Interest in high-yield currencies and resource-country currencies may have risen in response to the oil price surge.
In contrast, Turkish lira-yen underperformed, falling 1.2 percentage points from the previous day and slipping to sixth place in the rankings.
ECB meeting aftermath: EUR/USD buy positions increase
The impact of the ECB meeting being interpreted as hawkish was also reflected in EUR/USD positioning. EUR/USD buy positions increased 3.3% day-over-day, indicating that more investors are betting on further euro appreciation.
Meanwhile, in the New York market, the U.S. August Producer Price Index (PPI) accelerated to a 5.4% year-over-year increase, strengthening dollar-buying through rising long-term interest rates. The U.S. Treasury’s expanded long-term bond buyback program ultimately totaled $5.19 billion (approximately ¥800 billion), falling short of the $6 billion (approximately ¥930 billion) the market had expected, causing U.S. Treasury prices to continue falling — another factor supporting dollar-buying.
In the New York foreign exchange market, dollar-yen rose to 154.67 yen before pulling back to 153.85 yen at the close. EUR/USD fell to $1.1592 before rising to $1.1631. Euro-yen rose to 179.48 yen before falling to 178.75 yen. GBP/USD moved from $1.3491 to $1.3534, while dollar-Swiss franc moved from 0.8147 francs to 0.8108 francs.
Focus now shifts to U.S. CPI and BOJ policy management
Behind retail investors’ tilt toward selling positions is wariness over the U.S. CPI release on September 11. With PPI accelerating to 5.4% year-over-year, if CPI also remains elevated, expectations will strengthen that the Federal Reserve’s monetary tightening will be prolonged, potentially reigniting dollar-buying.
On the domestic front, speculation remains firmly entrenched that the Bank of Japan will proceed with monetary policy normalization, and this is being viewed as a yen-supporting factor. The impact of rising import prices due to high oil prices on the BOJ’s policy decisions is also being closely watched. Among retail investors, the environment continues to favor strategies of selling into dollar-yen rallies rather than chasing upside.
finance.biggo.com