Soros shorting the Australian dollar?

See the latest Australian dollar analysis here:

Macro Afternoon


From the SMH:

The Australian dollar fell in evening trade on the back of rumours that billionaire US investor George Soros is planning to short the currency.

The Aussie dollar slipped from $US1.0284 in late local trade to $US1.0253 in offshore trade as traders reacted to unconfirmed rumours that Mr Soros – who famously shorted the British pound back in 1992 – was planning a raid on the dollar ahead of Tuesday’s interest rate announcement.

A large number trades shorting the dollar totalling $US1 billion were placed via Hong Kong and Singapore late Monday, believed to be by Soros Fund Management.

“Someone … seems to be betting on a rate cut,” said one Sydney-based FX trader. “I’ve heard the George Soros rumour tonight. A billion dollars sounds like a lot, but it’s not enough to move the Australian dollar and it’s not a lot for George Soros, but there is a play happening  in the FX market.

Who knows? When the fall in the dollar comes it will be quick!

Houses and Holes
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  1. And here’s the dilemma for the RBA. If it cuts again in this environment, the A$ could plunge. Is that what it really wants – to be up there in perpetuity with the BoE as a Soros victim? Once the A$ fall starts, every man and their dog will sell the proverbial out of the currency. Time for the RBA to remind all concerned who controls monetary policy in Australia.

    • You mean the housing lobby Janet? The housing lobby controls the monetary policy in Australia?

      • That is actually EXACTLY as I see it. I believe Soros is one of the few people in the whole world who UNDERSTANDS the role of housing cycles, supply and demand, in the economic cycle. Unlike some of us, he does not use his knowledge to advocate reforms at the political level, he uses his knowledge to PROFIT BIG.

        I even go as far as to suggest that Soros’ lavish funding of “conservation” activism is purely an act of long term self interest relating directly to all this.

        If you don’t “get it”, never mind.

      • I see Soros’ involvement in anything to do with Australia, as hugely significant for the above reasons. I would even say that for potential FHB’s who have been on strike until now, this is a HUGE omen for good.

      • Alex Heyworth

        “for potential FHB’s who have been on strike until now, this is a HUGE omen for good.”

        Except that half of them will probably lose their jobs in the subsequent recession.

    • rob barrattMEMBER

      I agree with the plunge scenario, if I were in the carry trade right now I’d be teetering on the brink of selling out before the general rush for the exits gets under way, don’t want to be in too long – right!

  2. I dont think there is anything particularly surprising about this at all. Jim O’Neil was out there suggesting the AUD was ‘actionable’ a few weeks ago at 1.05 and proposing 0.85.

    There have been reports of a few (mainly European, but one in New York) outfits building short positions since late last year.

    Look at fundamentals, almost any chart you could think of and it looks like something to be short. That isnt to say it wont go higher (and watch it take off if the RBA holds today) but if it goes higher that will just mean more punters looking to go short and providing them more time to do it.

    • and yes I know those fundamentals are almost irrelevant while AUD has an AAA on it and is coughing up 3%+ in a world getting 0-0.5% and printing more money to seek that yield each day.

  3. Why wouldn’t every Aussie have an AUD hedge? It makes good sense.

    AUD goes up well that means our purchasing power goes up and our rates stay (relatively high) and may even mean incomes stay in there if the TOT can hang high. Ie this is the best case scenario!

    If it goes -well that’s a 30% or so reset to wealth.

  4. The place to short AUD was at 105.80 ish, not here.

    It would need solid closes below 1.0150 ish to indicate a real break out to the downside for AUD.

    The AUD carry is still attractive with a 25 bp cut vs US and JPY. Aus debt is also attractive , while we issue it. A number of things supportive of AUD.

    • That is probably right sans a true china property shock. We’re all hoping there isn’t one but the real numbers are very scary and some serious heads are putting bets on.

      An AUD hedge via a long position in gold and USD is what I like.

      • An AUD hedge through gold could prove very profitable, I agree. But only of solid support is breached at the 1.0150 level.

        .96 would be next.

        The conditions now for the AUD and Sterling back in ’92 are quite different. Soros was shorting BP against the DM, not USD. All to do with ERM etc. I would be careful shorting AUD until it’s clear that money flows are solidly out of AUD.

  5. How do they know who it is? Hutchinson Whampoa could be the one shorting? They are spending a billion here.

    The guns – they’ve stopped!
    Stabilize your rear deflectors… Watch for enemy fighters.
    They’re coming in! Three marks at 2:10!
    It’s no good, I can’t maneuver!
    Stay on target.
    We’re too close!
    Stay on target!
    Loosen up!
    Gold Five to Red leader, lost Tiree, lost Dutch.
    I copy, Gold Leader.
    It came from… behind!