Bank of America survey: Global investors betting on Japanese yen to stage a comeback next year, with gold and the US dollar coming in second.

According to a survey by Bank of America, global investors believe that the Japanese yen is poised to outperform major currencies next year. After a turbulent year for the Japanese currency and the worst performance in terms of returns against the US dollar, it is expected to rebound. In a survey of around 170 fund managers conducted by the bank, about one-third indicated that the yen will achieve the best returns next year, followed closely by gold and the US dollar. Only 3% of respondents chose the pound. The prominent position of the yen in the survey contrasts sharply with its lackluster performance this year. The US dollar has only risen by 1% against the yen this year, ranking at the bottom among G10 currencies. Meanwhile, driven by geopolitical and trade risks, gold prices have hit historical highs this year due to central bank demand and retail investor safe-haven buying. On the other hand, dragged down by uncertainty surrounding US President Trump's policies, the Bloomberg Dollar Index has fallen by about 7% this year, potentially marking the worst annual performance since 2017. The optimism surrounding the yen The uncertain outlook for interest rate hikes by the Bank of Japan this year is one of the reasons behind the poor performance of the yen; newly elected Prime Minister Taro Aso last month is also a key factor - as a proponent of loose monetary policy, his government is preparing an expenditure plan exceeding expectations. However, investors' optimistic expectations for the yen in 2026 may be precisely because the currency is undervalued, reflecting the continuous poor investment in Japanese assets. The same group of investors participating in the Bank of America survey has been underweight Japanese stocks by 4%, and this view has persisted for over a year. Bloomberg industry research strategists Audrey Childe-Freeman and Stephen Chiu stated: "If the US Treasury releases the next macroeconomic and foreign exchange report in November, the momentum of the US dollar against the yen may be exposed, bringing currency policy back into focus." Traders with a higher risk appetite may also bet that the Japanese authorities will intervene in the next few months to support the yen - when the yen fell below the important 160 yen level against the US dollar last year, Japan took intervention measures. "Speculators still clearly lean towards buying the dollar/yen, testing the tolerance of the Ministry of Finance, while verbal warnings continue to weaken their marginal impact on the market." Francesco Pesole, currency strategist at ING's London office, wrote on Tuesday, "Any bottom line may be around 160 yen, facing further upward pressure in the coming days." As part of its monthly survey of global fund managers, Bank of America consulted 172 investors with a combined asset management size of $475 billion between November 7 and 13.