The U.S. dollar recorded its highest level of investor demand this year, according to new data from Bank of America released on Monday.
The surge was fueled by hedge funds and asset managers increasing their dollar exposure, with heightened concerns surrounding Japan and France amplifying caution toward short dollar positions, the bank noted.
Hedge funds were particularly active in buying the greenback against the Japanese yen, Australian dollar, and various emerging market currencies. Asset managers, meanwhile, concentrated their purchases on dollar positions versus the euro, the report showed.
The strong appetite was also evident in the options market, where investors reinforced their dollar exposure primarily against the euro and emerging market currencies — highlighting the broad scope of demand.
Analysts at Bank of America added that the dollar’s rally could have been even stronger if not for offsetting supply from corporates and official institutions, which helped temper the upward momentum during the week.
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