The Australian dollar topped out at 0.7828 last week as hedge funds and other speculative foreign exchange traders continued to buy.
The ANZ reports that based on the latest US Commodity Futures Trading Commission data, the buying took the net long position on US futures markets for these speculative traders to USD3.4 billion of Aussie dollars.
That’s the biggest level of net longs since September 2014 when the Aussie’s decline from 93 cents to the recent low in the mid 68 cent region began.
On its own, that level of net long simply shows how bullish forex punters – the speculative community – have become towards the Aussie dollar. But equally, as the fall back below 77 cents Friday and Monday shows, such extreme positioning is itself a headwind to further gains.
It’s not a guarantee of a turnaround in the price or indeed that the peak for this run is in. But it does make the AUDUSD vulnerable if the FOMC surprises the market with a hawkish tone at this week’s meeting of the US Federal Reserve’s policy setting committee.
We’ll get the next update on positioning this Friday night.