Bloomberg News

Futures Traders Increase Bets on Aussie Drop to Most on Record

June 07, 2013

Futures traders increased bets that Australia’s dollar will weaken against its U.S. counterpart to the most on record going back to 1993 as yield differentials between the two currencies’ government debt shrink.

The difference in the number of wagers by hedge funds and other large speculators on a decline in Australia’s currency compared with those on a gain, known as net shorts, was 58,550 contracts on June 4, compared with 42,307 a week earlier, figures from the Washington-based Commodity Futures Trading Commission show.

Yields on 10-year Australian government bonds tightened to 1.08 percentage points relative to similar-maturity Treasuries, the narrowest spread since November 2008. Investors are paring holdings of higher-yielding assets amid speculation that the Federal Reserve will reduce stimulus measures that have weakened the dollar and lowered interest rates.

The Aussie dropped 1 percent to 96.06 per dollar in New York. It is down 0.7 percent this week and off 8.6 percent this year.

Bets the British pound will decline against the greenback increased to the most since at least 1992. Net shorts on the British pound rose to 77,738 contracts on June 4, compared with 74,525 a week earlier.

To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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