Bank of America Global Research discusses the latest IMF COFER data for Q2.

"One of the key drivers behind our structurally bearish view on USD has been the argument that global reserve managers would continue to diversify away from the USD due to several challenges, including fiscal dominance, USD debasement and geopolitics. Admittedly, the dedollarisation topic has attracted peak interest during USD stress points, notably when the correlation between USD and US Treasuries turns negative, a potentially signaling concurrent selling of US assets," BofA notes.

Liberation Day proved to be a pivotal but transitory moment in the "sell America" debate and despite sporadic episodes where the correlation has flipped, dedollarisation has all but faded into the background as all things AI dominate. The limitations of trading the dedollarisation theme are obvious, given both a lack of timely data and transparency from reserve managers. Yet the Q2 IMF COFER data do show the first meaningful shift away from the USD and into other traditional reserve currencies, notably the EUR and AUD," BofA adds.