Hedge funds estimates are all over the board, from 67 cents to 86 cents.
Some of those Hedge funds were kind enough to supply us with an explanation of their speculation on the value of the Aussie, here are some of their scenarios: • Aussie will be traded below 70 cents by mid-2018, if the nation’s bonds will falls below that of U.S. Treasuries. • The Aussie is likely to stay above 70 cents due to China’s strong economy, and due to the expectation of commodity price to increase in value. • The RBA may start rising interest from all time low (1.5%), reducing the house-price growth. According to this scenario, if the unemployment rate drops from 5.4% (19.12.17) to 5%, then the RBA is expected to increase interest rates. • If China growth will continue its stable track and won’t slow down, then the Aussie is supposed to reduce its decline. • U.S and Australia have the same interest value, standing at 1.50%bps, which means that IF Australia premium on “Australia Government bonds 2 & 5years yield” will trade below the “U.S Government bonds 2 & 5years yield” the Australia interest rate will weigh in the currency more than other factors. • Key point to remember: • According to the CFTC report, hedge funds reduced their long positioning almost by half, from 86K to 44K.