Hedge funds are increasing bullish wagers on the Australian dollar as markets position ahead of the Reserve Bank of Australia’s (RBA) policy decision next week, according to a report by Bloomberg citing the latest CME data.
The figures show call options betting on AUD gains versus the US dollar surged to six times the volume of puts on Wednesday, and remained more than triple that on Thursday. Trades of AUD150m ($107m) or larger followed a similar pattern.
The uptick reflects expectations that the RBA will raise its cash rate by 25 basis points on 17 March, supported by relatively high Australian front-end rates that make the currency attractive for carry trades. Hedge funds are also factoring in a potential peak in the broad US dollar rally.
The Aussie has strengthened roughly 7% against the US dollar this year, and more than 4% versus the New Zealand dollar, reaching 71.87 US cents on Wednesday — its highest level since June 2022.
Market participants say demand for Australian dollar calls is broadening. Citigroup has noted renewed interest from macro hedge funds in AUD/USD and AUD/NZD call options, while Bank of America Corp and Barclays Plc has reported activity from both Asia-Pacific and European investors.
