Bank of America Merrill Lynch FX Strategy Research discusses the positioning in USD, EUR, and GBP, noticing mainly that as this year so far has been characterized by the ’Trump fade’, positioning has been moving towards neutral levels across the board.
Looking across G10, BofAML notes that the contrast between the one-year and longer-term view suggests that this year’s USD sell-off has left much of G10 positioning close to neutral .
“The overall EUR market position is slightly long-although not as stretched as the one-year comparisons would suggest. Similarly, in USD and GBP, the past year has been characterised by a significant positioning shift, while taking a longer-term view suggests a more nuanced picture,” BofAML notes..
Turning more specifically to USD, BofAML notes a consistent message from the various positioning inputs.
“For one, the USD position has been steadily drawn down, both in our flow and in the futures data. Equity fund flows augment the picture, showing declining inflows to US equities from non-US domiciled investors, which turned to outflows in mid-March,” BofAML adds.
“Overall, while positioning in the majors looks neutral, it is worth noting the distance we have come in many of the G10 currencies in a short space of time, specifically in USD, EUR and GBP,” BofAML concludes.
Source: Bank of America Merrill Lynch Rates and Currencies Research
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