Australia Currency ETF in Trouble as Traders Bail on Aussie Dollar

The U.S. dollar has been getting most of the attention this year as a disappointing developed market currency, but there are concerns another dollar could be see more near-term weakness.

The CurrencyShares Australian Dollar Trust (NYSEArca: FXA), which tracks the Aussie against the U.S. dollar is higher year-to-date, but has shed nearly 2% over the past month. In fact, the Australian currency’s losing streak is now at four weeks and some traders are concerned that if commodities prices continue faltering, the Australian dollar will do the same.

Consequently, investors may track the markets through currency-hedged ETFs that try to mitigate the negative effects of a weakening Aussie, including the iShares Currency Hedged MSCI Australia ETF (NYSEArca: HAUD) and Deutsche X-trackers MSCI Australia Hedged Equity ETF (NYSEArca: DBAU).

Data suggest some traders are already bailing on the Australian dollar.