Hedge Funds Position for Yen Breakout Amid Political and Economic Shifts

Hedge funds are placing aggressive bets on the yen's potential surge against the dollar, with options activity revealing concentrated positioning for a breakout beyond 145. The currency has languished near 147 per dollar, but August 26 saw dollar-yen put volume quadruple calls—a clear signal Leveraged investors anticipate rapid appreciation.

Political turbulence fuels the momentum. Former President Trump's dismissal of Fed Governor Lisa Cook has intensified expectations of rate cuts, while France's no-confidence vote uncertainty drives haven demand. All eyes now turn to the U.S. payrolls report; weak data could cement bets on Fed easing.

Barclays Asia FX options head Mukund Daga confirms hedge funds are accumulating downside structures, with September expiry puts actively targeting 144.93. The market's abrupt shift follows a cascade of risk-off triggers, from transatlantic political instability to potential macroeconomic deterioration.