It Looks Like Everybody Was Shorting The Yen Going Into Today’s Election

We just mentioned that Shinzo Abe, Japan’s pro-inflation candidate, appears to have won a sweeping victory in today’s Japanese national elections.

The pressure he is expected to apply to the Bank of Japan to ease more has been a big cause of Yen weakness in recent weeks.

And EVERYONE has been on board the short yen trade.

The trade is the most crowded it’s been since 2007.

From Nomura:

After growing shorter for 3 straight weeks, the Japanese yen set a new record for its largest net short position since July 2007 in the week ending Tuesday. Moreover, our real-time estimates indicate that investors have built on their net short JPY positions since then by close to $2bn leading into Sunday’s election, and risk reversals are growing even more heavily skewed for JPY puts vs. USD calls.

yen short

[credit provider=”Nomura”]