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31 Mar 2015
Quarter-end FX flows might be substantial – Scotiabank
FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, mentions that today being the last day of the first quarter, substantial FX flows might be seen in the market as rebalancing occurs.
Key Quotes
“Today marks the last day of the first quarter, which can create substantial FX flows. For passive equity managers, they are likely to rebalance to benchmark weights, which implies selling of outperforming equities and buying of underperforming ones (and the associated currencies).”
“The divergence between equity returns in Q1 is noteworthy, with much of Europe up over 20% and the S&P up just 1%.”
“Accordingly, passive managers who rebalance quarterly will be rebalancing by selling EUR and buying GBP, CAD and USD.”
Key Quotes
“Today marks the last day of the first quarter, which can create substantial FX flows. For passive equity managers, they are likely to rebalance to benchmark weights, which implies selling of outperforming equities and buying of underperforming ones (and the associated currencies).”
“The divergence between equity returns in Q1 is noteworthy, with much of Europe up over 20% and the S&P up just 1%.”
“Accordingly, passive managers who rebalance quarterly will be rebalancing by selling EUR and buying GBP, CAD and USD.”