Bank of America Global highlights key takeaways from the aggregate FX positioning in Q1.
"Market still long non-USD G10. FX Aggregate FX positioning did not change much in Q1. The market remains long non-USD G10 FX. Aggregate positions for real money and hedge funds appear broadly similar in G10, despite differences in flows, but differ in EM.
Commodities in favor in G10. Aggregate G10 FX positioning is relatively light and shifted towards commodity FX in Q1. Both real money and hedge funds remain short USD and long EUR. Hedge funds did buy into the AUD strength, but also bought the JPY dip. They did sell EUR, but they remain long. Real money did buy the USD, but only to reduce their shorts." BofA notes.
"Official flows support AUD, against EURUSD. With few exceptions, corporate G10 flows were relatively muted in Q1; officials were much more active. Official sector demand may have contributed to AUD strength in Q1. Officials also sold EURUSD aggressively after the war in Ukraine," BofA adds.