Institutional investors have joined hedge funds in expressing confidence in the Australian dollar, marking a significant shift in market sentiment. For the first time since late 2024, major asset managers are holding a net positive position on the currency, signalling renewed faith in the Aussie dollar’s potential. This adjustment follows a period where institutional investors largely held a negative outlook.
Data from the Chicago Mercantile Exchange reveals that asset managers moved to a net positive position as of February 17. While the change is marginal, representing a shift from a substantial negative stance to a modest holding, the psychological impact is considerable. It suggests a growing belief that the Australian dollar is poised for further gains, aligning institutional sentiment more closely with that of hedge funds.
Hedge funds have been more assertive in their bullish stance. They have reached their most optimistic position since 2017, holding net long contracts of 70,300, an increase from 64,900 the previous week. The total value of these bets on the Australian dollar now stands at $7.2 billion, reflecting strong conviction among speculative investors.
According to Sean Callow, a senior FX analyst at ITC Markets, the Australian dollar remains the strongest major currency year-to-date, with a 6.1 per cent increase. This performance likely contributes to the growing positive sentiment among both hedge funds and institutional investors.
