Barclays: The U.S. dollar is expected to benefit from global fund managers’ end-of-month rebalancing buying

Barclays foreign exchange strategists said the dollar is expected to be supported by strong buying interest in the end-of-month rebalancing of global fund managers\’ portfolios for the first time since November.

Barclays foreign exchange strategists said the U.S. dollar is expected to be supported by strong buying interest in the end-of-month rebalancing of global fund managers\’ portfolios for the first time since November.
Strategists Sheryl Dong and Erick Martinez wrote in a report on Wednesday that Barclays\’ month-end rebalancing model showed strong buying signals for the U.S. dollar against most major currencies before the end of the month.
They said the driving factors include cooling stock markets, rising geopolitical risks, and high commodity prices.
If U.S. assets outperform, fund managers rebalancing their portfolios typically need to sell U.S. dollars to get back in line with their target allocations. If U.S. assets underperform, they need to buy U.S. dollars.
This signal is in sharp contrast to the year-to-date trend. It is also the first dollar buy signal since November after the Fed’s policy shift.
Strategists said that given the underperformance of the Nikkei, buying of the dollar against the yen is expected to be relatively light.

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