Portfolio rebalancing and reflation trades emerge into Q2 [Video]
|European stocks renewed record on Wednesday, the US dollar consolidated gains and the S&P500 stocks got a late-session boost. Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.
Moving forward, extension of stock rally and USD appreciation seem unlikely. One must give. The EURUSD holds ground near the 1.08 level – because the European Central Bank (ECB) looks determined to continue fighting inflation. But a robust GDP and a hot inflation report could break the back of the EURUSD bulls.
In Japan, the sumo fight between the Japanese officials and the yen bears remains intense as the yen bears are testing the Japanese nerves near the 152 level. But a hint of further policy tightening is certainly more effective than costly and barely effective FX threats/intervention.
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