Banks are starting to release their month end rebalancing expectations for February and there is a consensus for USD demand. Deutsche Bank's model sig
Banks are starting to release their month end rebalancing expectations for February and there is a consensus for USD demand.
Deutsche Bank’s model signals for February, based on current equity performance, suggest a reasonable shift toward USD buying. The largest relative outperformance is most pronounced versus European equities and therefore points towards EUR/USD supply.
In combination with the standard corporate month-end flows being more USD positive, sales of EUR/USD are one of Deutsche’s higher conviction views for the week ahead from a flow prospective.
The bank also notes how this is the first time in a while that the U.S. equity underperformance has been versus all of the rest-of-the-world indices that they track. This adds to its more bullish USD bias in the short term, especially due to the lack of other news flow for the week ahead.
Deutsche also highlights its seasonality charts and a sizable selling of NZD/USD on the day before month end, February 27, of 0.58% on average over the last 10 years. AUD/USD also shows a skew towards average selling on the month end date itself (February 28) and the day before.
Related comment – EUR/USD dominates this week’s G10 option expiry calendar
COMMENT-Month-end FX hedge rebalancing expectations — TradingView News
Banks are starting to release their month end rebalancing expectations for February and there is a consensus for USD demand. Deutsche Bank's model sig
Banks are starting to release their month end rebalancing expectations for February and there is a consensus for USD demand.
Deutsche Bank’s model signals for February, based on current equity performance, suggest a reasonable shift toward USD buying. The largest relative outperformance is most pronounced versus European equities and therefore points towards EUR/USD supply.
In combination with the standard corporate month-end flows being more USD positive, sales of EUR/USD are one of Deutsche’s higher conviction views for the week ahead from a flow prospective.
The bank also notes how this is the first time in a while that the U.S. equity underperformance has been versus all of the rest-of-the-world indices that they track. This adds to its more bullish USD bias in the short term, especially due to the lack of other news flow for the week ahead.
Deutsche also highlights its seasonality charts and a sizable selling of NZD/USD on the day before month end, February 27, of 0.58% on average over the last 10 years. AUD/USD also shows a skew towards average selling on the month end date itself (February 28) and the day before.
Related comment – EUR/USD dominates this week’s G10 option expiry calendar
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