Month End flow Models for May 2018
Bond and equity performances call for USD rebalancing sales in currency neutral investor portfolios. US assets have been outperforming their peers this month and
no wonder the highest signal is vs EUR. So watch out for the runup to the 4pm London fixings tomorrow and Thursday in all this mess we’re living. There could be some really nasty swings. The main signals are in EUR, CHF, JPY and scandies in that order, but all currencies could see some action. The lesser divergences have been noted in CAD, NZD as their assets have been relatively at par with US’ .
BUT one big warning, the models are up to date to yesterday, today’s moves are not in there but I wouldn’t expect to much change as EUR assets being dumped, the strength of the signal should remain if not increased.
As per previous month’s posts in relation to month end flows: They rarely change the underlying direction of the market but can create serious wobbles in some pairs or disrupt some positions at the time they hit the market out of experience. They can in turn offer good take profit or counter trade opportunities, which is the way I tend to use them rather than suing them as a trading strategy. The past months the models have been pretty much calling it right on the fixings but they are in no way a guarantee of course, especially in these days of uncertainty. So be careful and just know they will be around, so not to be taken off guard if an unexplained move by any news would occur around that time.
Stay safe and happy hunting
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Could be the second leg for a tomorrows trading set-up.
Sidelined at the London open, have a mood/dynamics check, maybe follow the flow with (smallish) shorts EU & GU (also depending much on headlines),
comes 1200 GMT, rotate out into a counter move … (well, something like that 😉
Hello AGP, welcome
Yep , loads of stuff to keep the adrenaline flowing for sure. For now I’m still firmly in the risk off, weaker EUR camp being short EURUSD, USDJPY and a tad EURJPY with all that’s going round, but keeping it sensible and nimble, trading slices around.
I’m thinking if the models call it right again this month, they could provide a very nice, temporary at least, take profit level for the USDJPY short on Thursday come 4PM Ldn time
Hello K-Man, this just to say that I struggled early in the day because (moderate) risk-on came in (way) earlier then expected (by me), so I managed to grab only very, very modest EU, GU & EUR/CHF gains
The “second leg” unfolded more or less as see above, pinpointed about 75% of the EU 600-675 ride plus another 38 pips in EUR/CHF
However, had a USD/CAD short eyed (already last night) but did not manage to enter (in what now is a 180 pip trip south) … blooper (sigh).
He AGP, there’s always the next move and this market has no lack of them. Keep fine tuning these levels and reading. I’m sure you’ll find some interesting reads in our stuff to help you get into what you like in time for the show.
Happy hunting
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