Bank of America (BofA) has released a report predicting that Commodity Trading Advisors (CTAs), known as trend followers, are expected to sell off the US dollar (USD) in significant quantities this week.
The report suggests that these traders are likely to buy the European Euro (EUR), the British Pound (GBP), the Australian Dollar (AUD), the Japanese Yen (JPY), the Mexican Peso (MXN) and the Canadian Dollar (CAD). in response to movements. on the currency markets.
BofA’s model indicates that the size of USD sales by CTAs will correlate with the currency’s declines. The more pronounced the decline in the value of the USD, the greater the volume of USD that trend followers are expected to sell.
This trend is underlined by the recent weakening of the JPY, which has returned to levels that previously prompted intervention by the Bank of Japan.
The start of next week will be marked by a bank holiday in both the United States and the United Kingdom, which BofA notes could lead to reduced liquidity in foreign exchange markets.
This lower liquidity environment could make the FX markets more vulnerable to larger moves if there were substantial trading flows.
This article was produced with the support of AI and reviewed by an editor. For more information see our General Terms and Conditions.
