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Yen seen benefiting as rising US rate volatility boosts safe-haven demand
BNY says near-historic speculative net shorts in yen futures could amplify any JPY rally if positions unwind, creating squeeze risk.
BNY strategist David Tam argues that rising U.S. rate volatility should tilt flows toward safe-haven currencies, and that the Japanese yen has historically been among the major beneficiaries during similar episodes.
FXStreet summarizes Tam’s view that safe-haven and repatriation flows can lift lower-yielding funding currencies like the JPY, while higher-beta, risk-sensitive currencies could struggle if global risk sentiment shifts.
BNY also points to positioning as an additional catalyst, citing near-historic levels of net short positioning in non-commercial yen futures in CFTC Commitment of Traders (IMM) data, alongside a steady decline in the yen since April 2025 as momentum and trend-following traders unwound prior net longs.
According to the commentary, that divergence between investors expecting defensiveness and fast money leaning the other way could leave markets vulnerable to a sharper squeeze, making the yen a cleaner trade than the Swiss franc if speculative shorts are forced to cover.