A minor tweak in the Bank of Japan's bond purchases has emboldened investors to bet the central bank is about to wind back monetary stimulus.
Going long on the yen is the biggest currency wager for AMP Capital Investors Ltd.'s Nader Naeimi. Singapore-based hedge fund Kit Trading Fund Ltd. started a bet on the yen last week, predicting the currency will appreciate about 10 percent to 100 per dollar. Options traders are the most bullish on the yen among developed-market currencies.
Japan's longest stretch of economic growth in two decades is fueling bets the BOJ will join its global peers and begin normalizing policy as soon as this year. The central bank cut purchases of longer-maturity bonds last week, prompting speculation it will allow 10-year yields to rise above its current target of around zero percent. The 10-year yield climbed to 0.08 percent last week, the highest since October.