Macro hedge funds were heavily active in yen trading on Monday, with a significant portion of flows reflecting a “mass square-up” of bullish positions rather than the initiation of new bearish bets, according to a report by Bloomberg citing traders at Nomura International and Citigroup.

The dollar-yen pair surged nearly 2% amid expectations that Sanae Takaichi’s win could spur fiscal stimulus and slow the pace of Bank of Japan rate hikes. Traders said many funds bought dollars primarily to close existing short positions, rather than to establish fresh bearish exposure.

“In my opinion, it’s a mass square-up,” said Antony Foster, head of Group-of-10 spot trading at Nomura in London. “We have seen some dollar buying since the LDP elections, but it would be wrong to say that macro funds as a body are acting a particular way. Some are squaring up, some are going long the dollar, but the main flows seem to be the former.”

Option market activity mirrored these dynamics. USD/JPY risk reversals — which compare the cost of hedging upside versus downside — fell sharply as short-dollar option positions were unwound, contributing to lower front-end risk premia.

Traders noted that the yen began to recover later Monday after one of Takaichi’s economic advisers suggested a potential BOJ rate hike in December, leaving investors still uncertain on the currency’s trajectory.