Barclays Capital's month-end rebalancing model generates USD buying signals across the board.
"We expect the passive rebalancing of hedges at month-end to lead to decent amounts of USD buying against all of the major currencies we include in our analysis," Barclays projects.
"Renewed concerns about the health of the Chinese economy led to a bout of global risk-off moves causing extreme losses in equity markets all across the board. The market value of the US equity market (because of its size) fell significantly relative to the rest of the world, while gains in bond markets were moderate," Barclays notes.
"Our model, which works under the assumption that static FX hedge ratios are maintained, shows strong USD buying signals into month-end against major currencies," Barclays concludes.
Barclays month-end fixing model provides signals for trading FX on the last day of the month. The model provides signals from '+++' through neutral to '---' to indicate the strength of this month's signal relative to its own history.
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