"Trump 2.0" looming clouds, hedge funds shorting the Australian dollar with the most intensity in nearly three years.

With the threat of US tariffs and overseas economic downturn hitting the Australian dollar, hedge funds are betting on a weaker Aussie. Data from the US Commodity Futures Trading Commission shows that as of the week ending December 31, leveraged funds had the highest bearish positions on the Australian dollar since March 2022. Given the sensitivity of the Australian dollar to changes in risk sentiment, these positions may have room to expand. Ray Attrill, head of foreign exchange strategy at the National Australia Bank, said: "The Australian dollar continues to play the role of 'scapegoat' for the G10 countries, as any factors that may affect economic growth outside the US also affect the Australian dollar's trend. The increase in speculative short positions in December is completely consistent with the terrible performance of the Australian dollar that month." Hedge funds increase short positions on the Australian dollar In the past three months, the Australian dollar has fallen by over 7% against the US dollar, and has also fallen against other G10 currencies except the New Zealand dollar. The Australian economy is also being impacted by the slowdown in its trading partner countries, providing traders with another reason to sell the Australian dollar. During the Asian trading session on Tuesday, the Australian dollar rose slightly by 0.1% against the US dollar, reaching 0.6249. Carol Kong, strategist at the Commonwealth Bank of Australia, said: "It is not surprising that traders are shorting the Australian dollar. Investors are preparing for the uncertainty of US policy and interest rate paths for the next four years before President Donald Trump takes office."