Hedge funds switched to the long Australian dollar at exactly the wrong time

Hedge funds switched to the long Australian dollar at exactly the wrong time

(Bloomberg) — Hedge funds have turned more bullish on the Australian dollar than at any time this year, before concerns about a slowing Chinese economy pushed the currency to a nine-month low.

Most Read from Bloomberg

The Australian dollar fell 0.6% to 64.57 US cents, the weakest since November as a property slump in China stoked fears of a further slowdown in the world’s second-largest economy. That may not bode well for leveraged funds that shifted their position in the Australian dollar to a net 17,432 contracts in the week ending August 8 from a net short in the previous week, according to CFTC data.

Disappointing growth in China, the world’s largest importer of commodities, and a widening price differential with the United States have pushed the Australian dollar to near the bottom of the rankings of G10 currencies this month. The Australian dollar is likely to remain under pressure with key Australian jobs and Chinese industrial production as well as retail sales data due this week, according to the Commonwealth Bank of Australia.

“AUD/USD could be sensitive to any errors in wages and workforce data now the RBA is approaching or close to the end of the tightening cycle,” Christina Clifton and Carol Kong, strategists at CBA, wrote in a note. . “Weak Chinese data this week could be another reminder of the weak outlook and weigh on AUD/USD.”

Read more: Aussie slides into stoked prices as shock absorbers fade

— with the help of Garfield Reynolds.

(Updates with the Australian move in the first two paragraphs.)

Most Read by Bloomberg Businessweek

© 2023 Bloomberg LP

Leave a Reply

Your email address will not be published. Required fields are marked *