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George Soros and his AUD/USD Short

Big George has done it again! The man famous for “breaking the Bank of England” was at it again earlier this week, this time his target being the Reserve Bank of Australia.

It all started last Monday when a Hong Kong-based forex firm received a humungous ONE BILLION USD sell order on AUD/USD. The RBA rate statement was fast approaching and the exchange rate at the time was around 1.0320.

Rumors soon circulated that Soros was behind the move and that Soros was anticipating a rate cut by the RBA. Keep in mind that expectations were for rates to remain steady and that if the central bank did indeed slash the benchmark interest rate, it would bring the rate down to its lowest level since the RBA’s creation.

Once word got around that Soros could potentially be behind the move, traders hopped on the bandwagon pretty quickly.

Soros was Right

As you know by now, George Soros was right on the money, as the RBA decided to cut rates by 25 basis points due to the central bank’s poor economic and inflation outlook. The RBA‘s benchmark interest rate now stands at 2.75%.

Adding to the intrigue of the deal, Soros apparently pulled off the deal three times with three different forex brokers, taking home a tidy profit of 19 million USD on each. For those of you who don’t wanna do the math, that’s a smooth 57 million USD!

What Now?

AUD/USD: 4-hour

AUD/USD 4-Hour Chart

Since the beginning of April, it’s pretty clear that the pair has been trending lower. After touching 1.0580, it sold off heavily, pulled back during the final weeks of the month, and then fell again to make a new 2-month low.

While we can never be absolutely certain where the price is headed, based on Soros’ bet and previous price action, it seems that the pair is poised to go lower. If major support at 1.0150 breaks, we could soon see AUD/USD back at parity!