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Investing.com - Bank of America reports solid U.S. dollar demand driven primarily by hedge funds during Monday-Wednesday proprietary flows, despite renewed market concerns about Federal Reserve independence.
Hedge funds showed particular interest in buying USD against the euro, while real money investors sought dollars versus the British pound, Scandinavian currencies, and the Chinese yuan, according to BofA’s analysis.
The bank noted that real money USD demand during the Monday-Wednesday period reached its highest level since late March, with muted real money USD supply contributing to BofA’s view that a summer dollar rally may occur, including against the euro.
Despite this short-term outlook, Bank of America maintains a bearish medium-term bias on the U.S. dollar, referencing its previous analysis titled "Summer retreat for USD bears" from July 17, 2025.
In a separate observation, BofA highlighted that hedge funds demonstrated notable Japanese yen demand heading into Japan’s Upper House election, with these investors selling euros not only against the dollar but also against the yen, though the bank itself maintains a bearish stance on the yen around the election period.
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