Yen appreciation has carry-trade seekers looking at these two currencies

The Japanese yen's recent appreciation has investors looking elsewhere for carry-trade funding, with the currencies of China and Canada eyed as potential replacements. The yen, the best-performing G10 currency, has appreciated around 6% against the dollar since late July, when authorities intervened in currency markets, according to LSEG data. Speculators flipped net long on the yen in the week to Sept. 8, according to the Commodity Futures Trading Commission. Such positions totaled around 10,800 contracts, compared to around 92,200 yen short positions the prior week. Hawkish commentary from Bank of Japan board members, which left open the possibility of accelerated rate hikes, has helped strengthen the yen in a way the historic joint U.S.