Leveraged funds reduced their net short position in the Japanese yen by 33,587 contracts to -104,231 contracts as of July 7, marking the largest decrease in approximately two years since August 2024, according to the US Commodity Futures Trading Commission (CFTC). Fed Chair Kevin Wash is scheduled to testify before Congress on July 14 and July 15, with US June Consumer Price Index (CPI) and Producer Price Index (PPI) data releasing 1.5 hours before his House testimony begins. Japanese Finance Minister Katayama Satsuki announced on July 10 plans to promote domestic investment by the Government Pension Investment Fund (GPIF) and other public pension funds, a potential long-term shift from Japan's decade-long capital outflow policy under Abenomics. The forex market for the week of July 13-17 faces heightened volatility following Iran's Islamic Revolutionary Guard Corps (IRGC) blocking the Strait of Hormuz on July 12 (Korean time) and subsequent US strikes on approximately 140 Iranian military targets.
Leveraged Funds Cut Yen Short Position by Largest Margin Since August 2024
Leveraged funds, which include hedge funds and commodity trading advisors (CTAs) employing trend-following strategies, held a net short position of -104,231 contracts in the Japanese yen as of July 7, according to CFTC data. This represents an increase of 33,587 contracts from the previous week, meaning the net short position contracted by that amount. The reduction marks the largest single-week decrease in short positioning since August 2024, approximately two years prior.
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Dollar Index Rises 0.09% to 100.967 in Previous Week
The dollar index (DXY), which measures the US dollar's value against six major currencies, closed at 100.967 on July 10, up 0.095 points (0.09%) from the previous week, according to Yonhap Infomax data. The index declined on three of the five trading days during the week despite US-Iran military conflict. The USD/JPY exchange rate finished at 161.737 yen, up 0.22% from the previous week, after reaching near 162.7 yen before retreating following the Japanese Finance Minister's remarks on pension fund investment on the final trading day. The EUR/USD rate closed at 1.14149 dollars, down 0.19% from the previous week, while the GBP/USD rate rose 0.37% to 1.34000 dollars. The offshore USD/CNH rate fell 0.05% to 6.7819 yuan, marking the second consecutive week of decline.
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Fed Chair Wash Testifies July 14-15 as US June CPI and PPI Release
Fed Chair Kevin Wash will testify before the House Financial Services Committee on July 14 at 8:30 AM, 1.5 hours after the release of US June CPI and PPI data. He will deliver his semi-annual monetary policy report to the Senate Banking Committee at the same time on July 15, again following the June PPI release. Market consensus expects June headline CPI to show a slight month-over-month decline due to falling energy prices, with the year-over-year rate dropping from 4.2% in May to 3.8%. Core CPI is expected to maintain a 2.9% year-over-year rate.
Japanese Finance Minister Katayama Satsuki's July 10 statement on promoting domestic investment by GPIF and other public pension funds represents a potential policy shift, though the specific implementation method remains unclear. GPIF's asset allocation targets, set every five years, currently allocate 25% each to Japanese bonds, Japanese stocks, foreign bonds, and foreign stocks, with a 5-6% deviation tolerance (5% for foreign bonds only). The current allocation framework took effect in April 2025. GPIF falls under the jurisdiction of the Ministry of Health, Labour and Welfare, not the Ministry of Finance, making the Finance Minister's announcement notable.
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Additional US economic data scheduled for release during the week of July 13-17 includes June retail sales (July 16), the National Federation of Independent Business (NFIB) June small business optimism index (July 14), the New York State July manufacturing index (July 15), the National Association of Home Builders (NAHB) July housing market index and June pending home sales (July 16), June import/export price index and industrial production, housing starts, and the University of Michigan July consumer sentiment preliminary reading (July 17). The Federal Reserve's Beige Book economic assessment report will be published on July 15. Fed officials enter their blackout period on Saturday, July 18, ahead of the Federal Open Market Committee (FOMC) meeting scheduled for July 28-29. Fed Governor Christopher Waller is scheduled to speak on the economic outlook at a New York Association for Business Economics (NYABE) event on July 13, while Vice Chair Philip Jefferson (July 16) and New York Fed President John Williams (July 15) will also make public appearances. The Bank of Canada (BOC) is widely expected to hold its policy rate at 2.25% at its July 15 monetary policy meeting.
FAQ
What did leveraged funds do with their yen positions as of July 7?
Leveraged funds reduced their net short position in the Japanese yen by 33,587 contracts to -104,231 contracts as of July 7, according to CFTC data. This reduction represents the largest decrease in short positioning since August 2024.
When will Fed Chair Kevin Wash testify before Congress?
Fed Chair Kevin Wash will testify before the House Financial Services Committee on July 14 and before the Senate Banking Committee on July 15. US June CPI and PPI data will be released 1.5 hours before each testimony begins at 8:30 AM.
What did Japanese Finance Minister Katayama announce on July 10?
Japanese Finance Minister Katayama Satsuki announced on July 10 plans to promote domestic investment by the Government Pension Investment Fund (GPIF) and other public pension funds. The specific implementation method was not disclosed, and GPIF's asset allocation targets are set every five years with the current framework effective from April 2025.
