On Monday, Bank of America (BofA) provided insight into possible actions from Commodity Trading Advisors (CTAs) in the coming week.
According to BofA, CTAs could continue to sell off the US dollar (USD) against most currencies, following a trend that emerged after the Consumer Price Index (CPI) report led to a weakening dollar. The bank’s models indicate that long positions in USD have been reduced this week.
The bank’s analysis shows that CTAs in the foreign exchange market are likely to continue shorting the euro (EUR), the British pound (GBP) and the Canadian dollar (CAD).
Additionally, CTAs are expected to increase their recently established long positions in the Australian dollar (AUD) and possibly initiate a long position in the Mexican peso (MXN), given the positive trend strength for the peso.
In the commodities sector, the trend for the precious metal was down, despite a rise in gold prices last week, which saw CTAs sold, albeit at a slower pace. BofA expects this trend of selling gold and oil to continue in the coming week.
The analysis also showed that long positions in CTAs are approaching extremely high levels, while long positions in aluminum are being unwound. Soybeans, on the other hand, experience short mating.
The bank’s report serves as a gauge for how trend-following traders might adjust their portfolios in response to market movements.
This article was produced with the support of AI and reviewed by an editor. For more information see our General Terms and Conditions.
