Credit score Agricole notes that their month-end rebalancing mannequin is pointing to delicate greenback promoting as we glance to wrap up the month of Might.
“International fairness markets have been broadly firmer in Might. In FX, the USD has outperformed throughout the board on the month. The strikes within the fairness markets, when adjusted for market capitalisation and FX efficiency this month, recommend month-end portfolio rebalancing flows are prone to be average USD promoting throughout the board, with the strongest promote sign within the case of the USD vs the AUD.”
As all the time, simply preserve this within the again pocket simply in case. It’s not meant to be a positive fireplace factor or a tough and quick rule. Sometimes, we will observe some volatility by way of month-end flows particularly when getting nearer in direction of the London repair. So, simply be cautious of that if anything.
That being stated, I’d wager that US-Iran developments are nonetheless the most important driver of buying and selling sentiment at this stage. And it is going to be powerful, even for month-end flows to override the market flows tied to danger optimism/pessimism nonetheless. So, we would get some noisy indicators however the wider worth motion ought to proceed to observe what broader markets are suggesting.
