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Hedge Funds Pile Into Aussie Options Betting RBA Joins Hawks

  • Implied volatility surges for 1-week Australian dollar options
  • Volatility picking up around RBA, Riksbank policy meetings
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Photographer: Brent Lewin/Bloomberg
Updated on

Speculators looking to profit from the hawkish shift among global central banks have a fresh target: the Australian dollar.

With the pound, euro and Canadian loonie all surging around 2 percent this week after officials signaled a bias toward tightening monetary policy, hedge funds are piling into Aussie options on expectations the Reserve Bank of Australia will follow suit. Implied volatility contracts with a tenor of one week spiked to 8.8750 Friday, the highest since May 5. Speculators added more than $1.7 billion of options on the Australian currency at a strike price of 77 U.S. cents over the past two days, DTCC data show.