Short Traders Burned As RBA Signal End Of Rate Cutting

Traders who placed record bets against the Australian dollar are ruing their timing, after the central bank signaled two years of interest-rate cuts are at an end and stepped back from efforts to talk down the currency.

The Aussie traded at 89.10 U.S. cents as of 11:20 a.m. in Sydney. It jumped 2 percent yesterday, the biggest one-day gain since June, paring its past year’s drop to 14 percent. Reserve Bank Governor Glenn Stevens left the benchmark borrowing cost at a record-low 2.5 percent, favored stable rates and omitted mention of an “uncomfortably high” exchange rate that was in the previous two policy statements.

Stevens helped drive last year’s biggest slump in the Aussie since 2008, as policy makers spent the fourth quarter flagging the need for a weaker currency to rebalance the economy in speeches, interviews and statements. Leveraged funds increased net positions betting on Aussie declines to 63,973 in the week ended Jan. 28, according to Commodity Futures Trading Commission data, the most in figures going back to June 2006.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu