A benign week for equities implies a slightly negative environment for the dollar – ING

Global equity markets are putting in a little run of gains. Quarter-end and half-year-end rebalancing may help equities and soften the dollar this week, economists at ING report.

Some respite in equities may help commodity FX in particular

“There is much focus this week that quarter-end and half-year-end rebalancing by buyside fund managers will give equities a lift into Thursday.”

“Barring fresh shocks and since it is not a big week for US data, it seems not unreasonable to think equities could post some marginal further gains this week.”

“A benign week for equities could see the likes of the Canadian dollar and Norwegian krone play catch-up with their hawkish local central banks. This all looks like a slightly negative environment for the dollar. Yet we doubt the dollar will slump.” 

“It is far too early for central bankers to be signalling the all-clear with inflation. And signs later in the summer that central banks will still be tightening even as growth slows may trigger another wave of equity selling.”