It seems to me that the AUD tends to make most of its gains in overnight markets, especially during NY hours and that this has been the case for the last few weeks. This suggests that the main buyers are your typical CTA trader or momentum fund who have been buying and adding to longs as the trend has emerged. There have also been some Sovereign wealth funds buying into the rise but local dealers think that this hasn’t been of significant size.
In other words, if the rise is driven by pure speculative accounts then the AUD/USD will be prone to sharp dips when trailing stops are triggered. These trailing stops are likely to be situated below trend lines or will be initiated by bearish moving average cross-overs. That’s how a lot of the CTAs operate.
