The Australian Dollar slipped from $US1.0284 in late local Australian trade to $US1.0253 in offshore trade as traders reacted to unconfirmed rumors that George Soros was planning a raid on the dollar ahead of Tuesday’s interest rate announcement.
Late Monday, a large number of trades shorting the dollar totaling $US1 billion were placed via Hong Kong and Singapore by the Hungarian-American business magnate’s Soros Fund Management.
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According to a Sydney-based FX trader, someone has picked a mark around $US1.0270 and seems to be betting on a rate cut. However he feels a billion bucks can’t do much to the Aussie.
The Australian Dollar is expected to turn its focus to domestic matters once again this week, with traders setting their sights on the Reserve Bank of Australia’s monetary policy announcement amid rising interest rate cut expectations. Credit Suisse complied data suggests the markets now see a 57 percent probability of a 25bps reduction in the benchmark lending rate, meaning investors’ outlook is at its most dovish since early February.
The economic data from Australia has shown signs of meaningful deterioration relative to consensus forecasts since April’s RBA sit-down. More worrying still, activity indicators out of China are showing signs of deterioration. The East Asian giant is Australia’s largest trading partner and arguably the most significant source of demand underpinning the pivotal mining sector.
Interestingly last month, the Aussie dollar hit a four-and-a-half year high against the Japanese Yen on the back of the massive stimulus announced by the Bank of Japan.
The hedge fund manager George Soros, who famously made a $1 billion profit when he shorted the British Pound in 1992, has reportedly repeated history by shorting the Yen on expectations that the BOJ would devalue, netting himself a $1 billion profit since November 2012. While Soros has been making money on the short trade, he has also positioned his portfolio on the long side in Japanese stocks that should perform well from a weaker currency.
The 82-year-old canny investor sold out of gold investments last year, sparking rumors that he would again be active in global currency markets.
The investor-philanthropist has built a reputation over the past 25 years of picking the impact of government decisions on currencies and commodities.
Speculation has been rife since last month that George Soros may be paying attention to Asian currencies again. The currency speculator recently paid a visit to China and Hong Kong, triggering concerns of his return to the region after his large bet against the Thai baht in the late 1990s.