Investing.com — Bank of America have released an estimate of month-end FX rebalancing flows, warning a significant outflow from the USD into the EUR and EM currencies, driven by strong equity performance and weak bond returns in November.

U.S. equities, which hold the largest share in global portfolios, gained 6% this month, while European stocks fell 3.2%, and Chinese equities dropped 5.7%. U.S. bonds saw modest gains of 0.4%, contrasting with declines in bonds across Europe and Japan.

The gap between the equity performance has investors rebalance their portfolios, leading to a significant sell-off of U.S. dollar assets as they adjust their holdings to keep a balanced mix of currencies.

“We are comfortable to tactically fade the USD rally on the very near term on trend reversal signals,” the bank added, citing lower U.S. yields and seasonal factors, including U.S. holidays.

The bank also pointed to potential inflows into the Swiss franc (CHF), driven by strong global equity gains. It highlighted the Swiss National Bank’s (SNB) large equity holdings, particularly in U.S. stocks, as a factor that heightens the CHF’s sensitivity to month-end portfolio adjustments.

BofA expects selling of to dominate, linked closely to the strong performance of equity indices like the . 

Though rebalancing flows may temporarily have a drag on USD, BofA noted that broader factors, such as U.S. interest rates and central bank policies, will ultimately shape the currency’s longer-term path.