FX round-up: Speculators go short US dollar for first time since mid-2014

Yen strength unravelled sharply going into the weekend, with selling stoked by a Bloomberg report that the Bank of Japan might move towards paying the country's lenders to lend, much as the European Central Bank announced in March.

Dollar/yen jumped like coiled spring, to end the day 2.13% higher at 111.79 as the yen fell back against all 31 of its major counterparts, while sterling leapt 2.69% to 161 yen.

It was the biggest one-day drop for the yen in 17 months.

The single currency's gains were somewhat weaker, the euro advanced 1.58% against Japan's currency.

Rate-setters in Tokyo might consider such a move alongside a further reduction in the country's already negative interest rates on the funds which banks hold in reserves at the BoJ when they decided on policy on 28 April, Bloomberg said.

Strength in the greenback was prevalent on Friday, with the US dollar spot index closing up by 0.55% to 95.116.

Speculators turn net short on the US dollar, odds of Brexit decrease

However, in a change of fortunes for the dollar, for the first time since July 2014 hedge funds and other large speculators were holding a net short position, to the tune of a net 21,567 contracts, the latest weekly tally from the Commodity Futures Trading Commission revealed.

Cable was also wanted, finishing the day at 0.59% to 1.44076. In the evening, William Hill would cut the odds of a victory by the 'Remain' camp in the upcoming 23 June referendum to the shortest since February to 1:3 against Leave's lengthened 9:4.

That capped a positive week for sterling, which gained approximately 1.4% against the US dollar.

Euro/dollar on the other hand retreated 0.58% for the session to 1.1222.

Yuan weakness

Not to be lost sight of, Bloomberg's replica of the Chinese yuan's CFETS trade-weighted index retreated 0.17% last week, for a fourth consecutive move lower, to its lowest since the basket was launched in December.

Versus the US dollar, the People's Bank of China's fixing rose 0.02% last week, but fell against the euro, yen and pound.

Further afield, the dollar was also stronger against the likes of the Brazilian real, appreciating by 1.04% to 3.5563 after the South American country's central bank sold $1bn in reverse-swap contracts, which is akin to selling the currency.

Versus the commodity currencies the greenback was mixed, giving back 0.49% to 1.2672 against the Loonie while the Aussie lost 0.39% against the USD to 0.7708.