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Investing.com - Bank of America maintains its short positions on the U.S. dollar against the euro and Australian dollar, while continuing short positions on the Japanese yen against both the U.S. dollar and euro.
The financial institution has added a long position on the Swiss franc against the Japanese yen, citing "rising global fiscal risk premia" as the primary rationale for this strategic move.
BofA has also initiated a short position on the euro against the Swedish krona through a put spread, pointing to Sweden’s "domestic resilience and beta to positive surprises in Europe" as key factors behind this decision.
The bank’s quantitative analysis indicates that current U.S. dollar downtrends are more pronounced against European currencies, with negative spot-to-volatility correlations suggesting potential increases in implied volatility during bearish dollar breakouts.
According to BofA’s positioning analysis, U.S. dollar shorts are not crowded, with positioning lighter compared to the end of the second quarter and remaining light versus historical levels, particularly among asset managers, while the market maintains long positions in the euro and to some extent the Australian dollar and Norwegian krone.
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