From the FXWW Chatroom – Citi’s month-end FX hedge rebalancing model suggests moderate selling of USD on Tuesday, 30th April. With the exception of USDJPY selling, the signal
measures just over the 0.5 historical standard deviations in all crosses. Our
estimated signal to sell USD is predominately driven by equity investor
rebalancing needs. This is due to the positive US equity market performance
leaving foreign investors under hedged on their equity assets. The signal to buy
GBPUSD is strongest at 0.78 standard deviations, owing to the outsized decline
in UK Government bonds fuelling the need to buy back GBP hedges.
– Barclays note a prelim run of their model points to USD selling against major
peers. The signal is strong against all peers but JPY, for which the signal is
moderate. Equity markets printed gains across majors, with risk sentiment
supported by accommodative core central bank policy, seemingly constructive
US-China discussions and global growth stabilizing in key regions. The
outperformance of US equities and bonds produces a strong USD sell signal.
prelims for citi & barx.
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