The market really does move in mysterious ways sometimes. The Commitment of Traders report for last week shows that Aussie dollar shorts have been blasted almost completely away, dropping another 24k contracts to just -10.5k:
This is the most neutral market we have seen since July when the dollar was trading at 78 cents. The subsequent drop to 70k plus shorts took the currency down 8-9 cents.
It is ironic that just as dollar positioning has neutralised, the recent bond market madness appears to be passing. On Friday the short end of the Australian curve fell below 2% again having recently bounced as high 2.16%, once again tipping a falling cash rate:
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