Investors’ views on the Australian dollar diverged during the Christmas week as hedge funds and institutional accounts took opposing positions on the currency’s future. The latest data from the Chicago Mercantile Exchange reveals a notable split in sentiment. Sean Callow, a senior FX analyst at InTouch Capital Markets, noted the contrasting approaches.
Hedge funds and leveraged accounts sharply increased their long positions on the Australian dollar, reaching 41,500 contracts. This bullish stance represents the most positive outlook since 2017 and is a considerable shift from early December, when these funds held net short contracts of 17,700. This aggressive move suggests a significant change in expectations among these investors.
Conversely, institutional accounts and asset managers maintained their bearish view on the Aussie dollar. These ‘real money’ investors held 40,300 net short contracts. While still a substantial figure, this is lower than the 68,100 short positions held at the beginning of December, indicating some moderation in their negative outlook.
With the opposing positions of hedge funds and institutional investors largely offsetting each other, the overall market stance on the Australian dollar is now neutral. Callow speculated that the increased activity could reflect investors positioning themselves for 2026 before liquidity decreased during the holiday period.
