DislikedRemember it's month end today in spot terms (T+2), and given the moves in equities this month there should be USD demand into Reuters fixing (now 3pm London because the time changed this weekend) as pension funds and large asset managers need to rebalance their FX hedges at the month end. Could easily last next 2 days, plus add a general trend into it and it gets very hard to be bullish EURUSD as long as we stay below 1.1460.Ignored
I would be very careful with the market tomorrow, and I am expecting a decent amount of intraday volatility and sharp moves possibly both ways.
- This month's rebalancing has been well telegraphed and market participants have been expecting it / trading into it - majority of short term risk takers (hedge funds / banks / prop shops) are already long USD
- A lot of the actual rebalancing flow has already gone through in the last 2 days
- A large SOMA redemption tomorrow - this is the FED's quantitative tightening where ~ 30bn USD of govie bonds on FED's balance sheet mature, US treasury repays 30bn to the FED, the FED doesn't reinvest the proceeds but rather sterilises / "destroys" these USD - basically draining out money / liquidity out of the financial system. This is usually USD positive too (as you are practically reducing money supply)
Combining all of the above I reduced my core short EUR in order to be flexible and be able to fade spikes.
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