Yet another hot hedge fund trade in Asia Pacific faces a crucial test after short-yen wagers backfired in a spectacular way last week.
Traders have been snapping up options betting Australia’s dollar will outperform its New Zealand rival since late June, amid speculation the former will hike interest rates to tame price pressures while the latter will cut them. The Aussie has obliged with a near 2% rise this month and traded at over 1.11 kiwi dollars on Monday.