Foreign exchange flows had been gentle into payrolls information, BofA says, highlights positions in danger

Investing.com — Financial institution of America (BofA) stated investor and overseas change (FX) choices flows main into the US payrolls report had been gentle final week, highlighting that a number of forex positions may very well be in danger.

In response to BofA, inside the Group of Ten (G10) currencies, there are potential dangers round hedge funds’ lengthy positions within the US greenback (USD) and Australian greenback (AUD), in addition to quick positions within the Canadian greenback (CAD).

Furthermore, actual cash buyers’ lengthy positions within the British pound (GBP) and quick positions within the New Zealand greenback (NZD) had been famous as weak.

The GBP emerged because the weakest G10 forex performer final week, however BofA noticed that buying and selling flows had been very gentle.

“With GBP positioning at impartial ranges, we would like to see indicators of latest shorts being added earlier than dipping again into GBP longs,” BofA FX strategists Michalis Rousakis and Athanasios Vamvakidis stated in a observe.

Regardless of gentle buying and selling flows within the Japanese yen (JPY), BofA identified that the Particular Drawing Rights (SDR) choices circulate for JPY has been constantly optimistic. The financial institution talked about that power within the USD-JPY change charge past 160 could be self-limiting, they usually proceed to favor a draw back within the EUR-JPY pair.

Within the rising market (EM) FX area, BofA famous stronger circulate actions. Within the Europe, Center East, and Africa (EMEA) area, important promoting of the South African rand (ZAR) was highlighted.

Hedge funds additionally resumed shopping for of the Turkish lira (TRY). In Asia, demand for the Chinese language yuan (CNH) by each hedge funds and actual cash stood out, with hedge funds additionally lowering their quick positions within the South Korean gained (KRW).

Lastly, internet flows in Latin American (LatAm) currencies had been described as lighter. Hedge funds purchased the Mexican peso (MXN), and actual cash confirmed demand for the Colombian peso (COP), coming from quick positions in each circumstances.