Australian Dollar Hits Record Lows Amid Global Risk Aversion

Asset managers have pushed bearish bets against the Australian dollar to a record high, with net short positions reaching 129,065 contracts in the week ending October 20. This trend represents the seventh consecutive weekly increase in short positions, causing the currency to retreat to approximately 70.33 US cents.

National Australia Bank analysts attribute this shift to a flight toward the US dollar as a safe-haven asset. This risk aversion is driven by escalating tensions between the United States and Iran, alongside investor fears of a correction in equities driven by artificial intelligence.

Market attention now shifts to domestic economic indicators ahead of the Reserve Bank of Australia's policy meeting on November 3. There is currently a 64% probability of a 25-basis-point rate increase. This expectation follows signals from Assistant Governor Sarah Hunter that efforts to contain inflation are ongoing, leaving investors to await upcoming Australian inflation data to gauge the central bank's next move.