Hedge funds and large speculators have boosted their bullish positions on the Australian dollar to the highest level in over eight years, reflecting confidence that rising bond yields and a prolonged Reserve Bank of Australia (RBA) tightening cycle will support the currency, according to a report by Bloomberg citing CFTC data.
The latest data shows that net-long positions surged 43% to 57,115 contracts in the week ended 3 February, the highest since late 2017.
The rally underscores investor interest in the Aussie’s yield advantage, with swap markets now pricing in a near-certain rate hike in June. The RBA raised its key interest rate last Tuesday, becoming the first major central bank to tighten in 2026.
“The Australian dollar is uniquely positioned with a hiking cycle underway,” JPMorgan strategists, including Ben Jarman, wrote, upgrading their AUD/USD near-term target to 0.73 US cents from 0.68. They highlighted catalysts such as shifts in FX hedging behaviour and net portfolio flows supported by strong fiscal metrics.
The buildup in long positions signals that hedge funds are increasingly betting on a sustained period of strength for the currency, driven by higher interest rates and robust economic fundamentals.
