Breaking News: U.S. Dollar Facing Massive Sell-Off, Analysts Warn of Further Losses - Bank of America Report
In a recent report dated Aug. 19, analysts at Bank of America revealed that the U.S. dollar is experiencing widespread selling pressure, with hedge funds and corporates leading the way. This has resulted in major gains for currencies like EUR, JPY, and GBP, as well as higher-risk G10 currencies and EM FX.
Despite the weakness of sterling in the G10 group, hedge funds have shown strong support for the currency, keeping investor flows positive. The bank noted that while GBP positioning is long, there is still room for growth, especially among hedge funds.
Last week marked a turning point for Bank of America's proprietary EM FX, with a shift to positive territory following recent market turbulence. Hedge funds were seen buying currencies like INR, KRW, and ZAR, while real money investors favored BRL, IDR, SGD, PLN, and CZK.
Overall, the EM FX positioning remains slightly short, except in Asia where it is notably short after the recent sell-off. The report also highlighted that the hedge fund short position in EM FX appears to be stretched.
Analysis: This report from Bank of America suggests that the U.S. dollar is under pressure, with potential for further losses. Investors may want to consider diversifying their portfolios into currencies like EUR, JPY, and GBP, as well as higher-risk G10 and EM FX currencies. It is important to monitor market trends and remain cautious in the current environment.