Bank of America reported that investors had largely sold off the US dollar last week, driven by slightly positive economic indicators from the United States. The move came in response to somewhat encouraging U.S. inflation data and softer-than-expected retail sales.
According to Bank of America, the sell-off in the US dollar was widespread, with real money investors now slightly shorting the currency. Despite this trend, hedge funds’ long positions on the US dollar are still at their highest levels in the past five years.
In the currency markets, the Australian dollar (AUD) saw increasing interest as investors continued to build their long positions. Conversely, short positions in the Swedish krona (SEK) and the New Zealand dollar (NZD) saw a slight decline.
Emerging market currencies also attracted attention, with buying activity focused on regions such as Europe, the Middle East and Africa (EMEA), as well as Asia. The Turkish Lira (TRY) was highlighted as a currency in which both hedge funds and emerging market investors have increased their purchases across the board.
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