Signals are all extremely weak this month, so much so that there is little clarity on whether to expect net USD selling or buying. This is because asset returns have been muted, with bonds and equities returns of opposite sign in both the United States and the Euro Area. As a result the notional amounts on currency hedges do not need to be rebalanced much, and we expect both low volume and little direction
FX month-end rebalancing analysis Lingering conflicts in Ukraine and the possibility of further economic sanctions against Russia weighed on European equities and the EUR. While bonds traded firmly globally due to rising risk aversion, the fall in EUR more than offset its gains in the euro area, resulted in a modest decline in the market value in USD terms. The estimated rebalancing of FX hedges implied by these underlying market movements. The model output for this month shows a modest USD selling signal against EUR, while neutral for other currencies.