Foreign exchange investors are increasingly betting that Australia’s unprecedented bushfires will hurt the country’s economy and some are short-selling the Australian dollar in anticipation it will fall. “The fires are definitely an additional weight on the economy, and should lower the barriers for an RBA rate cut,” said Terence Wu, a strategist at OCBC Bank in Singapore. He suggested short-selling the Australian dollar in a note to clients on Thursday, targeting a fall to US$0.6728. Price moves, notwithstanding a boost from better-than-expected retail sales data on Friday, suggest Wu is not alone in his bet. Shifts in interest-rate futures pricing also show an increase in bets on a cut to rates when the RBA next meets on 4 February.

Source: The Guardian January 13, 2020 01:07 UTC