26 Nov 2013
Session Recap: Dollar advances ahead of rebalancing
FXstreet.com (San Francisco) - US Dollar advanced against its major competitors on Monday as investors are taking positions ahead of the November month-end possible rebalancing. EUR/USD, GBP/USD and AUD/USD declined while the USD/JPY extended advance.
According to Chris Tevere from Forex.com, the November month-end rebalancing flow may see USD come under pressure. "Market capitalizations for November were mixed across the board – The largest gain was seen in the United States which saw a rise of 549B on the month, while the biggest decline was in Australia, falling 111B (as of 11/24 close)."
"So how do we make sense of this? Well, the more severe a change of the principal assets (primarily equities and bonds), then the more likely portfolio managers are either under or over-exposed to certain currencies. Our model suggests they may be holding significant USD exposure, consequently they may need to meaningfully diversify away from the dollar over the coming days," points Tevere.
Tevere believes that AUDUSD, EURUSD, GBPUSD would be bullish while the USDCHF, USDCAD, USDJPY would be bearish. "Accordingly, we believe the buck could see a substantial impact from these flows heading into Friday’s fixing," Chris concluded.
The EUR/USD performed its first negative day in three, with three out of 11 sessions going up. Today, the pair was unable to break above the 50% fib level (Oct 25-Nov7 decline) at 1.3560 and it closed the day at 1.3515.
The GBP/USD fell from 1-month highs at 1.6240 to close at 1.6155. However the Pound to Dollar conversion remains above previous weeks’ range of 1.5890-1.6120.
The USD/JPY consolidates levels above 100.75 and extended gains to nearly 6-month highs at 101.90. The yen to dollar closed above the 101.50 key level as Jamie Coleman mentioned in a recent article, "a close above the 101.50 level keeps the pressure on for a move to 102.50 followed by the May highs in the 103.70/75 area."
Main headlines in the American session:
November US Markit services PMI flash 57.1
US: Annual Pending Home Sales fall by 1.6% in October
Philly Fed forecasters survey downgrades US GDP view
US Dallas Fed Manufacturing Business Index falls to 1.9 in November
In case you missed it: Video gold!
Wall Street closed mixed the day Nasdaq touched 4,000 13 years later
According to Chris Tevere from Forex.com, the November month-end rebalancing flow may see USD come under pressure. "Market capitalizations for November were mixed across the board – The largest gain was seen in the United States which saw a rise of 549B on the month, while the biggest decline was in Australia, falling 111B (as of 11/24 close)."
"So how do we make sense of this? Well, the more severe a change of the principal assets (primarily equities and bonds), then the more likely portfolio managers are either under or over-exposed to certain currencies. Our model suggests they may be holding significant USD exposure, consequently they may need to meaningfully diversify away from the dollar over the coming days," points Tevere.
Tevere believes that AUDUSD, EURUSD, GBPUSD would be bullish while the USDCHF, USDCAD, USDJPY would be bearish. "Accordingly, we believe the buck could see a substantial impact from these flows heading into Friday’s fixing," Chris concluded.
The EUR/USD performed its first negative day in three, with three out of 11 sessions going up. Today, the pair was unable to break above the 50% fib level (Oct 25-Nov7 decline) at 1.3560 and it closed the day at 1.3515.
The GBP/USD fell from 1-month highs at 1.6240 to close at 1.6155. However the Pound to Dollar conversion remains above previous weeks’ range of 1.5890-1.6120.
The USD/JPY consolidates levels above 100.75 and extended gains to nearly 6-month highs at 101.90. The yen to dollar closed above the 101.50 key level as Jamie Coleman mentioned in a recent article, "a close above the 101.50 level keeps the pressure on for a move to 102.50 followed by the May highs in the 103.70/75 area."
Main headlines in the American session:
November US Markit services PMI flash 57.1
US: Annual Pending Home Sales fall by 1.6% in October
Philly Fed forecasters survey downgrades US GDP view
US Dallas Fed Manufacturing Business Index falls to 1.9 in November
In case you missed it: Video gold!
Wall Street closed mixed the day Nasdaq touched 4,000 13 years later