Macro hedge funds are ramping up bullish option positions on the Australian dollar after the currency rallied to its strongest levels against the US dollar since November, according to a report by Bloomberg citing trading data from the the Depository Trust & Clearing Corporation (DTCC).
The DTCC’s figures show the Aussie recorded its busiest two days of option activity against the greenback last week since late July, with call volumes – bets on further gains – tripling puts. Several trades topped A$150m ($100m).
Traders say macro funds are positioning for further strength in the Australian dollar, supported by robust household spending, stronger-than-expected growth, elevated commodity prices and hawkish commentary from the Reserve Bank of Australia. Governor Michele Bullock recently warned that firm consumer demand could limit scope for rate cuts.
The Aussie has been September’s second-best performing major currency, behind only Norway’s krone, and its rally has extended beyond the greenback. It has climbed to multi-month highs versus the Canadian dollar and Swiss franc, with hedge funds heavily favouring call options in both pairs.
Weak Canadian economic data and labour reports have fuelled bets on a Bank of Canada rate cut this week, while Swiss National Bank President Martin Schlegel signalled rates could be pushed back below zero if needed, boosting the Aussie against the franc.
