It is that time of the month again and the weekend break sort of splits the momentum in closing out March trading this time around. It leaves the last two days of the month to work with, before we transition to April in the middle of the week. That’s not quite a clean look and feel to things but it is what it is.
As we get into the new week, month-end flows will be a consideration in the sessions ahead. And seeing what analysts are saying, dollar buying looks to be what most are pointing to this time around.
Credit Agricole notes that their month-end fixing model is pointing to “moderate” bids in the dollar against the rest of the major currencies bloc.
“The moves in equity markets, when adjusted for market capitalisation and FX performance this month, suggest that month-end portfolio-rebalancing flows are likely to be moderate USD buying across the board with the strongest buy signal in the case of the USD vs the NOK.”
To pair with that, Barclays is also suggesting a similar read as we look to this month-end. The firm notes that there should be “strong” dollar buying this time around for the most part.
“Our passive month-end and quarter-end rebalancing model shows strong USD buying against most majors, and moderate buying against the EUR, JPY, and GBP.”
While these flows can be spread out across the span of a few days, just be wary that month-end shenanigans can and tend to also hit closer to the London fix. So, that will be one to watch out for in the coming two days.
The dollar itself had already been trading firmer last week, rebounding well after the Monday drop to post a solid weekly advance. Do keep that in mind as well with some key levels on the charts also in play, not least with USD/JPY testing the waters at the 160.00 level. And that could also invite intervention from Tokyo if they see fit.