The Australian dollar is the second-worst performing developed
market currency in the world this year behind the Japanese
Of course that has meant bad news for the CurrencyShares
Australian Dollar Trust (NYSE:
), which has plunged 13 percent year-to-date.
Although Australia is backed by
an AAA credit rating
and still some of the highest borrowing costs in the developing
(2.75 percent benchmark interest rate), the Aussie has drawn
plenty of detractors this year.
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Financier George Soros shorted the currency. Hedge fund legend
Stanley Druckenmiller previously made bearish comments about the
Aussie and scores of banks of have pared their forecasts for the
AUD/USD currency pair. In late June, National Australia Bank
lowered its AUD/USD forecast for year-end 2013 to 88 cents from
93 cents while slashing its 2014 forecast to 83 cents from 87
according to The Australian
Before that, Westpac and Golman Sachs, among others, took the
knife to their AUD/USD estimates. That is good news of the
unheralded ProShares UltraShort Australian Dollar (NYSE:
). CROC does not need much more good news as the double-leveraged
bearish play is already up 24.3 percent this year, but that is
exactly what the fund has gotten thanks to BlackRock (NYSE:
The world's largest asset manager said the Australian dollar
may fall to 80 cents against the greenback in the next nine
months. "We prefer to be sellers of the Aussie dollar still,"
said BlackRock Managing Director Stephen Miller
since it was highlighted last month
as one inverse ETF investors should get acquainted with.
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Not only have traders recently increased their bearish bets on
the Aussie, but there are other factors that could spark further
downside for the already embattled currency. The Reserve Bank of
Australia may eschew another rate cut in August, but if the
Chinese and Australian economies continue to slow, RBA may not be
able to go the rest of this year without further cutting
Last night's flash reading of China's July PMI shows the
world's second-largest economy is slowing. That is not good news
for Australia because China is the largest export market for
Australian firms. In other words, CROC will not be a crock if
current economic conditions in the Asia-Pacific region
For more on
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