Hedge Funds Supercharge Aussie Shorts as RBA Splits With Fed
A dovish Reserve Bank of Australia is driving hedge funds to ramp up bets against the nation’s currency.
(Bloomberg) -- A dovish Reserve Bank of Australia is driving hedge funds to ramp up bets against the nation’s currency as the policy stance increasingly diverges from a hawkish Federal Reserve.
Leveraged funds have boosted net Australian dollar shorts to the most since November, according to the latest data from the Commodity Futures Trading Commission to Feb. 8. Futures and options speculators piled into positions to benefit from a weaker Aussie after RBA Governor Philip Lowe pledged to remain patient in assessing inflation even as peers in the U.S. and Europe made it clear they will respond to heated price growth.
“The RBA has been stubbornly resistant to market expectations,” giving reason for investors to sell the Aussie, said Marshall Gittler, head of investment research at BDSwiss Holding Ltd. “The gap between what the market expects them to do and what they say they’re going to do is perhaps the greatest among the major currencies.”
The Aussie has fallen about 8% in the past year, the third-worst performance among Group-of-10 currencies. The risk-sensitive currency has also been battered by surging omicron infections and worsening Russia-Ukraine tensions that have spurred investors to seek haven assets.
It was little changed at around 71.30 U.S. cents on Monday, after rising 0.9% last week .
Apart from the Aussie, hedge funds also increased net short positions on the yen, Swiss franc and Canadian dollar. They added to net long positions on New Zealand’s dollar, the CFTC data showed.
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