Mirroring the strong rally in the Australian dollar, something that’s seen the AUD/USD rally by more than 11% since January 15, currency traders have not been this bullish towards the Aussie since late 2014.
The chart below, supplied by ANZ, shows Australian dollar positioning based on the latest commitment of traders report produced by the US Commodity Futures Trading Commission (CFTC) last Friday.
Combining short and long positioning reported by speculative investors, there were a net 14,000 long Australian contracts held by traders as at the close of business last Tuesday, the highest number seen since September 2014.
That equates to US$1 billion in net long positioning held, up from US$600 million in the prior week.
Long positions indicate that the market, on balance, is looking for further Australian dollar strength in the period ahead.
While momentum-based traders may see the build up in long positioning as a signal of further gains ahead, some contrarian investors may deem the spike to be a sign that the rally may be close to nearing its end.