The Bank of America said the fight of Fed against inflation could be a boon to dollar. Strategist Athanasios Vamvakidis explained that seeing consumer prices hitting record highs means that the economy is overheating. This situation could push dollar against other currencies like euro and yen.

That is also why St. Louis Fed President James Bullard said yesterday that the bank should take a more aggressive approach on monetary policy.

As such, the dollar index peaked because expectations of a rate hike increased. Many believe that the Fed will soon raise interest rates.

A survey conducted by the Bank of America indicated that investors expect the central bank to increase rates by an average of 1.5% next year.

The survey was conducted on November 5-11 among investors with $1.2 trillion in assets under management.

On a different note, cash distribution fell to 4.4% in November, from 4.7% in the previous poll last month. This shows that investors have increased their total capital stock and reduced their share in commodities. Meanwhile, bonds remained very undervalued, despite the yield on 5-year Treasuries nearly doubling since the beginning of August.