G10 dollar selling intensifies, but emerging-market flows still favor the dollar

Overview

The report uses Deutsche Bank's CORAX electronic spot flow data to compare US dollar positioning among different investors across G10 and emerging-market foreign exchange. Its core conclusion is that the dollar faces an intensifying selling bias within G10 but remains favored by institutional flows in emerging markets, revealing a clear regional divergence.

Core views

The report first notes that overall positioning in both G10 and emerging-market currencies against the dollar improved over the past two weeks. Contributing factors included softer US economic data, which further reduced market expectations of a September Federal Reserve rate hike; in addition, the dollar weakened notably in the week before the report after the US Treasury unexpectedly announced an increase in long-dated US Treasury buybacks. Against this backdrop, the CORAX indicator, based on aggregated global electronic spot trading flows, shows that hedge funds became more bearish on the dollar, particularly against G10 currencies. Real-money investors also reduced dollar purchases during the same period, although the flow picture in emerging markets remained more cautious: hedge funds and real-money investors continued to favor the dollar over local currencies overall. In G10 markets, systematic hedge funds strengthened positions unfavorable to the dollar: they increased purchases of EUR and CAD, maintained moderately positive flows toward JPY, and retained slightly positive flows toward SEK and NZD. At the same time, they reduced their selling of CHF, GBP, AUD, and NOK compared with two weeks earlier. In other words, this group not only expanded long flows into certain G10 currencies but also reduced the intensity of short positioning in others, broadening the flow pressure facing the dollar. Discretionary hedge funds likewise shifted further against the dollar. They significantly increased purchases of CAD, moderately increased purchases of NZD and SEK, slightly increased purchases of EUR and GBP, and shifted from slight selling to buying in NOK and JPY. CAD therefore received incremental support from both systematic and discretionary hedge funds, while JPY and NOK showed a relatively clear improvement in direction. Real-money investors also reduced their support for the dollar, although performance varied by currency. This group increased purchases of GBP, CAD, and AUD and moderated its selling of EUR; by contrast, it increased selling of SEK, NOK, and CHF. Therefore, although overall dollar selling pressure within G10 strengthened, divergences remained across investor categories and currencies, and the trend should not be interpreted as all G10 currencies receiving equal buying support. Emerging-market flows, by contrast, continued to favor the dollar. Discretionary hedge funds continued selling a broad range of emerging-market currencies, including HUF, SGD, TRY, CNH, ILS, THB, PLN, and ZAR, while reducing purchases of CZK and MXN. Systematic hedge funds continued to sell CNH and PLN significantly and MXN more moderately; however, this group still bought HUF, ZAR, and SGD to a moderate extent and maintained slight purchases of ILS, indicating that flows within emerging markets were not entirely one-way. Real-money investors likewise continued to support the dollar: they sold MXN, PLN, and CNH relatively heavily and sold SGD, THB, and ZAR more moderately; in contrast, this group increased purchases of CZK, HUF, and TRY. Across investor categories, CNH and PLN were affected by selling from multiple types of investors, while MXN also faced selling pressure from systematic hedge funds and real-money investors. Some Central and Eastern European currencies received localized buying, but this was insufficient to alter the overall preference for the dollar in emerging markets. The CORAX charts use three-month rolling net flows as a share of total flows, broken down by categories including investors, hedge funds, asset managers, corporates, systematic hedge funds, and discretionary hedge funds. The report explains that if the EUR indicator for a given client group is +10%, this means that, based on trading volume over the past three months, 55% of that group's flows represented net euro buying. The report also converts current flows into percentiles relative to the past five years and separately presents investor-category and hedge-fund-category breakdowns for USD G10 and EUR. The data are through 23:59 London time on August 21, 2026.

Analysis framework

The report first uses US economic data, Federal Reserve rate-hike expectations, and the US Treasury's long-dated Treasury buyback announcement to explain the recent dollar environment, and then measures changes in dollar positioning using CORAX global electronic spot flows. It subsequently separates G10 from emerging markets and further compares the currency buying and selling directions of systematic hedge funds, discretionary hedge funds, and real-money investors. Finally, it uses three-month rolling net-flow shares and percentiles over the past five years to provide historical context for current positioning.

Methodology notes

• Quantitative/Factor/Portfolio Theory

  CORAX electronic spot flow indicator

  This indicator aggregates global electronic spot foreign-exchange trading flows and uses three-month rolling net purchases as a share of total flows to characterize the positioning direction of different client groups across currencies and compare demand for the dollar in G10 and emerging markets.

• Quantitative/Factor/Portfolio Theory

  Five-year percentile comparison

  The report places current three-month rolling flows within the historical distribution over the past five years, expressing current positioning as a percentile relative to historical levels and examining different investor and hedge-fund categories separately.

• Event-Based Strategy and Behavioral FinanceEvent-driven analysis

  Link between macro events and changes in dollar flows

  The report links softer US economic data, cooling expectations of a September Federal Reserve rate hike, and the US Treasury's unexpected announcement of increased long-dated Treasury buybacks with the recent weakening of the dollar and changes in institutional positioning.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• US dollar versus G10 currencies

  Hedge funds became more bearish on the dollar, while real-money investors also reduced dollar purchases, intensifying the selling pressure facing the dollar within G10.

  Weaknesses

  Both systematic and discretionary hedge funds expanded purchases of multiple G10 currencies or reduced their selling.

  Comparison

  Compared with two weeks earlier, flow support for the dollar weakened more within G10 than in emerging markets.

• US dollar versus emerging-market currencies

  Hedge funds and real-money investors continued to favor the dollar over local currencies overall.

  Strengths

  Currencies including CNH, PLN, and MXN faced relatively pronounced selling, providing the dollar with relative flow support.

  Weaknesses

  CZK, HUF, and TRY received incremental buying from real-money investors, while some emerging-market currencies also received support from systematic flows.

  Comparison

  Compared with the intensifying dollar selling in G10, emerging-market flows were distinctly more cautious and more favorable to the dollar.

• EUR, CAD, and other G10 currencies

  Multiple G10 currencies benefited from increased hedge-fund buying or reduced selling, with CAD receiving support from both systematic and discretionary hedge funds.

  Strengths

  Systematic flows increased exposure to EUR and CAD; discretionary flows increased exposure to CAD, NZD, SEK, EUR, and GBP; discretionary flows shifted from slight selling to buying in NOK and JPY.

  Weaknesses

  Real-money investors continued selling EUR, although the intensity of selling moderated; real-money selling of SEK, NOK, and CHF increased.

  Comparison

  CAD received particularly notable support across investor groups, while SEK and NOK showed opposing directions between hedge funds and real-money investors.

• CNH, PLN, MXN, and other emerging-market currencies

  Emerging-market currencies faced institutional selling pressure overall, although localized divergences existed across investor categories.

  Strengths

  Real-money investors increased purchases of CZK, HUF, and TRY; systematic hedge funds maintained positive flows toward HUF, ZAR, SGD, and ILS.

  Weaknesses

  CNH and PLN faced selling from multiple investor categories, while MXN also faced selling by systematic and real-money investors; discretionary hedge funds sold a broad range of currencies.

  Comparison

  Localized buying did not alter the overall pattern of emerging-market flows continuing to favor the dollar.

Key data

• Flow data cutoff timeAugust 21, 2026, 23:59 (London time)Corresponds to the Friday closing data for that week.
• Recent-change observation periodPast two weeksThe report uses this period to compare recent changes in positioning against the dollar across G10 and emerging markets.
• CORAX rolling window3 monthsPositioning is measured using three-month rolling net flows as a share of total flows.
• CORAX indicator exampleEUR at +10% corresponds to 55% of trading flows representing net euro purchasesIllustrates the meaning of the net-purchases-as-a-share-of-total-flows indicator.
• Historical comparison windowPercentile over the past 5 yearsUsed to measure the relative position of current flows within the historical distribution.

Impact & implications

The report reveals not a uniform global direction for the dollar but rather a divergence in flows between G10 and emerging markets: G10 currencies are receiving broader hedge-fund support, while real-money investors are also reducing dollar purchases; emerging-market local currencies remain under widespread pressure, particularly CNH, PLN, and MXN. Some currencies are receiving localized buying, but this has not yet reversed the overall institutional preference for the dollar in emerging markets.