Bank of America said investors broadly sold off the US dollar last week, driven by slightly positive US economic data. The move was a response to somewhat encouraging US inflation data and softer-than-expected retail sales data.
The sell-off in the US dollar was widespread, with real money investors now holding a small short position in the currency, according to Bank of America. Despite this trend, hedge funds’ long positions in the US dollar remain near their highest levels in five years.
Interest in the Australian dollar (AUD) has increased in currency markets, with investors continuing to build up long positions. Conversely, short positions in the Swedish krona (SEK) and New Zealand dollar (NZD) decreased slightly.
Emerging market currencies also attracted attention, with buying activity concentrated in regions such as Europe, the Middle East and Africa (EMEA) and Asia in particular. The Turkish lira (TRY) was highlighted as the currency in which both hedge funds and emerging market investors increased their purchases across the board.
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