Hedge funds switch yen bets after Japan election shock
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Takaichi victory forces unwinds and a move to topside trades, while barriers give dealers a headache
The surprise outcome of the Japanese election has led to a U-turn among many macro hedge funds that are now positioning for a weaker yen through exotics options structures, which has left dealers scrambling to manage exposures from barrier trades.
Going into the contest for Japan’s new prime minister, one of the last consensus positions in the foreign exchange volatility space was for a bullish yen against the US dollar.
But Sanae Takaichi’s historic victory on October 4 to become head of the
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