Barclays FX rebalancing signals are mainly USD neutral
Repeats with no changes
Dec 18 (Reuters) -Barclays have released the signals from their month and quarter-end FX rebalancing models and they are relatively USD neutral.
The UK banks' combined passive month- and quarter-end rebalancing model shows no strong dollar directional bias against most majors, while month-end signals show weak USD buying against most majors.
Barclays' proprietary rebalancing model indicates a weak dollar-buying signal by month-end against most majors, with a neutral sign on USDJPY. Their quarter-end rebalancing model using the same framework indicates mixed dollar selling signals, with a strong sign on EUR/USD, a moderate sign on USD/JPY and GBP/USD, and a weak sign on others. Overall, the combined signal shows no strong dollar directional bias at the end of December.
Barclays highlight two forces playing against each other in their month-end models. On the one hand, the dollar continues to appreciate, which largely decreases asset values in dollars outside the US and hence increases the rebalancing need to sell the dollar at the month-end, enhanced by the steady gains in US equities. On the other hand, similar to October, equity movements do not.
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Richard Pace is a Reuters market analyst. The views expressed are his own. Editing by Andrew Cawthorne.
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