Investing.com – Bank of America analysts say the US dollar has sold off across the board, and further losses remain possible.
“Our own flows show USD selling across the board so far in August, especially from hedge funds and corporates,” Bank of America analysts said in an Aug. 19 note.
“EUR, JPY and GBP have benefited the most, but recently so have high-beta G10 currencies and EM FX. The hedge fund’s long USD position remains vulnerable.”
Despite sterling being the weakest currency in the G10 so far in August, our investor flows remain positive, with hedge funds in particular providing strong support.
“The GBP positioning is long, but not stretched, with hedge funds having more room,” Bank of America added.
Last week was the first week in which the bank’s own EM FX turned positive since the recent market turbulence.
“Hedge funds bought INR, KRW and ZAR – they sold HUF. Real money bought BRL, IDR, SGD, PLN and CZK, they sold CNH and ILS,” the bank said.
“The overall positioning of emerging market currencies is somewhat short, with the exception of Asia where it is clearly short following the recent market sell-off. Hedge funds’ short EM FX position also appears tense,” BoA added.
