Asset managers are growing even more bearish on Australia’s dollar, boosting short positions to a record even as the currency slipped to a nine-month low.
Real-money funds increased their net short position to 83,810 contracts in the week to Aug. 15, the largest bearish position in Commodity Futures Trading Commission data going back to 2006.
The Aussie has weakened 3.9% against the US currency this quarter, the worst-performing Group-of-10 currency over the period, as China’s recovery has stumbled and the spread between Australian and US bond yields has widened. The currency slid to 63.65 cents last week, the lowest since November. The Aussie will likely remain under pressure this week amid a worsening Chinese property sector and US dollar strength before Federal Reserve chairman Jerome Powell’s speech at Jackson Hole, according to Commonwealth Bank of Australia.
“We consider there is a growing risk that AUD/USD dips below 0.60 before year-end,” Kristina Clifton and Carol Kong, strategists at the bank, wrote in a note to clients. “It will likely take a big Chinese stimulus package focused on commodity-intensive infrastructure spending to turn around the downtrend.”
While asset managers are growing increasing bearish, hedge funds are still clinging on to a bullish position. Leveraged funds held a net 16,227 long positions in the week to Aug. 15, down from 17,432 a week earlier, CFTC data also show.
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