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Feb 27 - 12:55 PM

Credit Agricole: Predicting Moderate USD Selling Into This Month-End Fix; What's the Trade?

By eFXdata  —  Feb 27 - 10:45 AM

Synopsis:

Credit Agricole's recent analysis leverages their month-end fixing model to anticipate moderate USD selling across various currency pairs, with a particular focus on long AUD/USD and short USD/CAD positions as we approach the month's end. This projection is informed by the performance of global equity markets in February and the observed strength of the USD throughout the month.

Key Insights:

  • Global Equity Performance: The analysis underscores that global equity markets have shown positive momentum in February, which plays a crucial role in the month-end fixing model and its implications for currency market movements.

  • USD Dynamics: Despite the broader firmness in equity markets, the USD has maintained strength across the board over the month. This dynamic sets the stage for the predicted currency flows.

  • Model Predictions: Credit Agricole's fixing model, which considers adjustments for market capitalization and FX performance during the month, suggests that there will be moderate USD selling. This outlook is based on the alignment of portfolio rebalancing flows at the month's end.

  • Specific Currency Signals: The strongest signals identified by the model are for long positions in AUD/USD and short positions in USD/CAD. These findings highlight where the most significant movements are expected, according to the predicted USD selling pressure.

Conclusion:

Credit Agricole's analysis provides insightful predictions on moderate USD selling across the board, with a spotlight on AUD/USD and USD/CAD as the currency pairs to watch. This forecast, grounded in the interplay between February's equity market trends and the USD's performance, offers valuable guidance for investors and traders looking to adjust their strategies in anticipation of these expected market shifts. The analysis not only identifies potential currency movements but also emphasizes the importance of considering global equity performance and FX dynamics in month-end portfolio rebalancing decisions.

Source:
Crédit Agricole Research/Market Commentary

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