Dollar falls on Soros talk
The Aussie slipped to a low of $US1.025 against the greenback from $US1.029 as local traders reacted to rumours that Mr Soros - who shorted the British pound in 1992 - was planning a raid on the dollar in the wake of Tuesday's interest rate announcement. The dollar had traded earlier on Monday at above $US1.030.
Pressure on the dollar had also come about after data showed retail sales unexpectedly contracted in March, adding to speculation a weakening economy will prompt the RBA to cut interest rates to a record low.
A large number of trades shorting the dollar totalling $US1 billion were placed via Hong Kong and Singapore late on Monday, believed to be by Soros Fund Management. "Someone has picked a mark around $US1.03 and seems to be betting on a rate cut," one Sydney-based currency trader said on Monday night. "I've heard the George Soros rumour tonight. A billion dollars sounds like a lot, but it's not enough to move the Australian dollar and it's not a lot for George Soros, but there is a play happening in the FX market. If it is him, it's probably a bet on a rate cut. These days a billion bucks can't do much to the Aussie."
Frequently Asked Questions about this Article…
The Australian dollar fell amid market talk that billionaire investor George Soros had a large short position against the Aussie, combined with weaker-than-expected retail sales in March. Traders also speculated the data could prompt the RBA to cut interest rates, putting further downward pressure on the currency.
No. The article reports market rumours that the trades were believed to be by Soros Fund Management, but it describes this as talk and belief rather than a confirmed fact.
A large number of short trades totalling about US$1 billion were placed via Hong Kong and Singapore late on Monday, and market participants believed those trades were linked to the rumour.
The Australian dollar slipped to a low of US$1.025 from around US$1.029, after trading earlier at above US$1.030.
Retail sales unexpectedly contracted in March, which added to speculation that a weakening economy could prompt the Reserve Bank of Australia to cut interest rates to a record low—heightening downside pressure on the currency.
In this context, shorting the Australian dollar means placing trades that profit if the local currency falls against the US dollar. The article notes a belief that large short positions were placed around the US$1.03 mark as a bet on a possible rate cut.
According to a Sydney-based currency trader quoted in the article, US$1 billion sounds like a lot but isn’t necessarily enough to move the Australian dollar significantly, and it’s not a large amount for a fund the size of Soros Fund Management.
Everyday investors should monitor confirmed economic data (like retail sales), official RBA announcements on interest rates, and be aware that market rumours—such as high-profile short positions—can create volatility in the FX market even if they aren’t fully verified.
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