Bank of America (BofA) provided insights on the current state of the G-10 foreign currency position, noting that it has become more balanced compared to the end of the second quarter. However, the bank also highlighted that some weaknesses remain, particularly with regard to long positions for hedge funds in the US dollar (USD).
According to Bank of America, demand for USDJPY was an important trend in the first half of the year, and its partial reversal was the most notable change in the third quarter. The movement of the G-10 foreign exchange market in the foreign exchange market remains driven by hedge funds, with USD long positions continuing to weaken.
In contrast, real money remains neutral on EURUSD pairs and focuses on emerging market currencies and swap trading.
The futures market is currently more balanced than it was earlier in the year. Despite this improvement, the FX options market points to potential risks. These risks are particularly related to long positions in Australian dollar (AUD) and short positions in Japanese yen (JPY) and Swedish krona (SEK).
The bank’s analysis found that the market is characterized by buying on the Australian dollar, buying to some extent on the Norwegian krone, and selling on the Canadian dollar, the New Zealand dollar and the Swiss franc.
This article was translated with the help of an artificial intelligence program after an editor’s review. For more details please refer to Banha Terms and Conditions
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