Forex Market Overview: USD and AUD Gain Traction as CAD and NOK Face Sell-Offs
Demand for the U.S. Dollar (USD) saw a notable surge, particularly against Emerging Market Forex (EMFX), as investors closed out 2024 with a strong long position on the USD, according to Bank of America.
Among G10 currencies, investors maintained a neutral stance overall, while positioning in EMFX leaned short.
The fourth quarter of 2024 saw especially strong demand for USD against EMFX. Hedge funds held heavily stretched long positions, while real money positioning appeared relatively lighter.
Within the G10 group, investors ended the year with long positions in the USD and Australian Dollar (AUD), while the Canadian Dollar (CAD), New Zealand Dollar (NZD), and Swiss Franc (CHF) were short. Demand for USD was particularly strong against the Euro (EUR) and British Pound (GBP) in the final quarter.
The Norwegian Krone (NOK) and CAD emerged as the most sold currencies of 2024. Hedge funds reached their maximum long positions on the USD and AUD, while CAD saw maximum short positions.
In terms of real money positioning, investors were heavily long on GBP, with moderate long positions in AUD and USD. Conversely, NOK, NZD, and EUR faced significant short positioning. Sentiment for the USD in options improved sharply in the fourth quarter, especially against EUR and GBP.
