Nov 30 (Reuters) – Citibank have released a final estimate of month-end FX hedge rebalancing flows which call for modest USD selling today, with the signal slightly stronger than their previous preliminary and interim ones.
The bank note that fixed income markets have gained strongly in November, particularly in Europe. Equities have shown mixed performance with the MSCI US index out-performing all other major markets.
Today’s net USD sell signal comes from foreign investors needs to hedge gains in US equities as well as US investors needs to reduce hedges on under-performing foreign equities. Fixed income hedge rebalancing flows are expected to be marginally USD positive.
The signal to sell USD vs JPY is strongest at 0.8 standard deviations. This is driven by Japanese investors rebalancing of foreign fixed income hedges as well as foreign investors needs to reduce hedges on Japanese equities.
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Richard Pace is a Reuters market analyst. The views expressed are his own
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