Despite the challenges thrown at riskier currencies by the recent U.S. government shutdown, the CurrencyShares Australian Dollar Trust (NYSEArca: FXA) is up 2.6% in the past month and 2.8% since the start of October.

The path of least resistance for FXA and the Aussie appears to be higher and that could be catching some currency market participants off-guard as it was just few months ago that the Aussie was the short currency du jour. George Soros reportedly took a large short position in the Aussie and Stanley Druckenmiller overtly spoke bearishly on the currency.

Heavy shorting of the Aussie pushed FXA down from a April peak around $105.50 to an August trough below $90, but the ETF has stormed back, perhaps aided in part by rampant short-covering. And more gains could be on the way as Deutsche Bank currency strategist John Horner has a 98 U.S.- cent forecast for the currency by year-end and would not rule out a 1 U.S. dollar valuation at some point in the fourth quarter, according to Xinhua News.

Aussie bears hoping for another rate cut out of the Reserve Bank of Australia may want to think twice. Last week, swaps data indicated traders only see a 22% chance RBA cuts rates by the end of 2013, down from 37% last month. [Interesting Views on Aussie Dollar ETFs]

“Traders see a 20 percent chance that the RBA will cut its benchmark interest rate from 2.5 percent this year, according to data compiled by Bloomberg on overnight-index swaps. The likelihood for a rate reduction was estimated at 46 percent at the end of last month,” reports Masaki Kondo for Bloomberg.