Futures traders waged record net bets the Australian dollar will decline against the U.S. dollar as concern intensified that global growth is slowing.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the Australian dollar compared with those on a gain -- so-called net shorts -- was 35,527 on May 29, the most ever in figures from the Washington- based Commodity Futures Trading Commission that go back to 1993.
The so-called Aussie, the world’s fifth-most traded currency, has dropped 5 percent against the U.S. dollar over the past month. Demand for riskier assets is evaporating on concern a recession in Europe, weaker Chinese manufacturing and an increase in the U.S. jobless rate signal the global economy is faltering. Australia’s dollar has climbed 37 percent since the start of 2009 as demand from China and India for the nation’s resources spurred a record mining boom.
“There’s a broader bearish sentiment about the Aussie, reflecting gloom on the global economic outlook,” said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. “The cyclical upswing in the currency associated with the resources boom is under a cloud.”
The Aussie dropped to 96.66 U.S. cents as of 9 a.m. in Sydney, 0.4 percent below the close in New York on June 1 when the currency slid as low as 95.82, the weakest since Oct. 5.
Futures are agreements to buy or sell assets at a set price and date. The figures reflect holdings in currency-futures contracts at the Chicago Mercantile Exchange as of May 29.
Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.
To contact the reporter on this story: Garfield Reynolds in Sydney at email@example.com
To contact the editor responsible for this story: Garfield Reynolds at firstname.lastname@example.org